Halister News

(Bloomberg) -- While global markets are currently focusing on expectations for Sept. 21 Fed rate decision, this is also a big week for U.K. data. Inflation numbers due this morning will set the scene ahead of Thursday’s BOE meeting, Bloomberg strategist Simon Ballard writes.

• Markets found some stability overnight after Fed Governor Brainard advocated a wait-and-see approach to policy; WIRP now shows 22% rate-rise probability for Sept. FOMC
  • Credit markets are still susceptible to headline risk but after the latest selloff, wider corporate bond spreads may now encourage some investors to look for buying opportunities
• Robust Chinese data should also underpin near-term EUR risk sentiment; China Aug. industrial production +6.3%, retail sales +10.6%
• Risk Appetite Model registers spike in volatility (10.7% to 18.7%) on back of rates selloff, but closes off the session wides
  • Bloomberg Barclays Eur-Agg Corporate index closed yday at 109bps (+2bps); Bloomberg Barclays Eur HY index closed at 389bps (+22bps)
• CDX IG closed -2.9bps at 76.73 in overnight session; iTraxx Asia Ex Japan IG currently -0.4bps at 109.63 and iTraxx Australia quoted -1.8bps at 98.52

NEWS

• Corporate News
• JD Sports Fashion 1H Pretax Up, Positive 2H Trading Encouraging
• Ocado 3Q Retail Gross Sales Meet Estimates
• Manx Telecom Says Trading In Line With Board Expectations
• Ikea Group FY Sales Rises 7.1%; Plans First India, Serbia Stores
• Ahlstrom Raises Profitability Outlook, Narrows Sales Forecast
• Boeing Boosts China Plane Demand Outlook as Middle Class Grows
• Air Liquide Seeks EU3.3b in Rights Offer for Airgas Purchase
• GIP to Acquire $4.3 Billion Stake in Spain’s Gas Natural Utility
• Vedanta Wins Cairn Nod for BHP-Style Resources Conglomerate

• Financial News
• China’s Postal Savings Bank Seeks Up to $8.1 Billion in IPO
• BNY Mellon Names David Cruikshank as Asia Pacific Chairman
• CYBG See ‘Double-Digit’ Return on Tangible Equity by End 2019
• ABN Amro CEO Zalm to Step Down in 2017
• Westpac refunds $9.2m to 160,000 young customers under 21
• Esure Plans to Spin Off GoCompare.com Unit Via Separate Listing

• Credit Rating News
• Activision L-T Debt Raised to Baa2 by Moody’s; Outlook Stable
• Fitch Affirms Six Chinese Mid-Tier Banks; Outlook Stable
• Fitch Affirms New Zealand’s Major Banks; Outlooks Remain Stable
• Fortescue Rtgs Unffctd By Debt Repayment: S&PGR
• S&PGR Places State of Rio de Janeiro ‘CCC-’ Rtg On Watch Neg

• Other News
• Brainard’s Argument for No September Hike Likely to Sway Fed
• Pimco Bond Fund Cuts Bet as Dimon to Gundlach Warn on Rates Path

ANALYST VIEWS

• There will be some recovery, which will be more than just a dead-cat bounce; markets will remain jittery nevertheless, wary of that rate hike (and) also won’t be helped by investor positioning: creditmarketdaily.com

NEW ISSUES

• BNG EU500m 0.25% 5/2025 Tap MS -9
• State Of Rhineland-Palatinate EU500m 3Y MS -20
• European IG credit pipeline here and HY credit pipeline here
• Issuers exposed to S-T rollover and interest-rate reset risk here

• NOTE: Simon Ballard is a credit strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

(Bloomberg) -- Netherlands to reopen 0% 01/2022 for EU2b-EU3b, with issue price set at 10am CET; 5Y issue seen as attractive versus semi-core and core peers and isn’t expected to be swapped.

• ABN Amro (Kim Liu)
  • May well be the only reopening of the 5Y benchmark in 2016, depending on issuance size
  • DSTA could then decide to issue at low end of total 2016 bond target
  • 5Y benchmark looks very attractive on its own curve on an ASW basis; also cheaper than Finnish, Belgian and French 5Y benchmarks

• Rabobank (Richard McGuire)
  • Don’t anticipate this tap will be swapped as DSTA strives to achieve its target of 5 1/2 years for average maturity of its outstanding portfolio (debt + swaps) at end-2016
  • 5Y DSL trades 2.1 standard deviations cheaper against Finnish 3.5% 04/2021, 1.8 cheaper versus OBL 0% 10/2021

• JPMorgan (Gianluca Salford)
  • DSL 01/2022 trades with benchmark discount of almost 3bps relative to surrounding bonds, at upper end of 5Y DSL benchmark discount trading range over the past year
  • 5Y Netherlands trades cheap relative to Belgium

(Bloomberg) -- USD/THB may consolidate near its year-to-date low in near-term even if Bank of Thailand reiterates its lack of desire for a strong baht, Bloomberg strategist David Finnerty writes.

• In the minutes of its Aug. meeting, central bank highlighted the “recent appreciation of the baht might not be beneficial to the ongoing economic recovery”
• Market-implied probability of a Fed rate hike at next week’s meeting is only 22%, signaling a low likelihood of a USD rally vs THB on a rate increase
  • Lack of a Fed rate hike this month is likely to encourage investors to continue their current search for yield; global funds have been net buyers of Thailand’s bonds and equities since the beginning of June, spurring baht strength
• Bank of Thailand is expected to leave its benchmark interest rate unchanged at 1.50%, according to 21 of 22 economists in Bloomberg survey, with one forecasting a 25 bps cut; decision due at 2:30pm local time tomorrow
• USD/THB down 0.1% at 34.869; FX pair touched 34.492 on Aug. 30, its YTD low
• NOTE: David Finnerty is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

(To get daily e-mails of calendars: (BCAL ALERT ) (For Israel Markets column: NI ISMKTCOL ) By Sharon Wrobel (Bloomberg) -- At a meeting on Monday in Tel Aviv, Facebook Inc.’s Joel Kaplan and Monika Bickert heard Israeli ministers loud and clear: the social network must do more to eliminate the incitement of terrorism on its pages. The sides agreed to create joint teams to further discuss how to deal with internet incitement. WHAT TO WATCH:

• Central Bureau of Statistics expected to release trade balance data for Aug. at 1pm in Jerusalem
• Palestinian Authority, Israel Electric Reach Accord: Channel 2

EQUITY MOVERS:

• Israel Chemicals (ICL IT) lowered to neutral vs buy at UBS
• Migdal Insurance (MGDL IT) IFS rating cut to Aa1.il from Aaa.il at Moody’s Midroog
• Perrigo (PRGO IT) CEO says review ongoing as activist Starboard takes stake

MARKETS:

• TA-25 Index +0.3% to 1,437.24 on Monday
• Shekel -0.1% at 3.7701/$ at 8:56am in Tel Aviv
• U.S. natural gas -0.4% to $2.904/mBtu
• WTI crude oil -0.8% to $45.91/bbl
• Gold +0.1% at $1,329.41/oz

--MARTIJN VAN DER STARRE