Halister News

--ELISA MARTINUZZI

(Bloomberg) -- U.K. Jan. retail sales ex-auto fuel m/m est. 0.7% vs prev -0.9%.

• U.K. Jan. retail sales ex-auto fuel y/y est. 3.4% vs prev 2.1%
• U.K. Jan. retail sales incl-auto fuel m/m est. 0.8% vs prev -1.0%
• U.K. Jan. retail sales incl-auto fuel y/y est. 3.6% vs prev 2.6%
• U.K. Jan. public finances (PSNCR) est. n/a vs prev 8.1b
• U.K. Jan. public sector net borrowing est. -13.9b vs prev 6.9b

(Bloomberg) -- Risk assets have stabilized, U.S. and U.K. forwards are selling off while German rates have lagged, writes Barclays strategist Cagdas Aksu in a client note.

• EUR rates have lagged the sell-off as EUR 5Y5Y fwd rates have rallied less than U.S. or U.K.; EUR rates market may be nervous about upcoming ECB meeting
• If risk assets continue to rally, difficult for EUR rates not to follow a rates sell-off; do not expect ECB to deliver very bold QE package; swapped issuance may also pick up
  • Recommend selling Bund ASW vs Eonia to position for a rise in longer German rates, currently -11.5bps; target up to 6bps of tightening
• Don’t see compelling conditions for notable tightening in peripheral spreads, remain neutral near term
• Negative U.K. policy rates seems very unlikely, though should not be wholly discounted
  • Front-end OIS is very flat; should re-steepen if the MPC eases further or pushes back against current pricing
  • Recommend entering GBP 1Y/1Y1Y FWD OIS steepeners, target 35bps, stop at -10bps

(Bloomberg) -- Best positions ahead of ECB’s March meeting are a combination of EUR curve flatteners, long carry trades in the periphery and short core rates via selling OTM bund calls, Credit Suisse strategist Florian Weber writes in a client note.

• Favourite curve flatteners are EUR 5s7s and 10s15s, which are are trading too steep for the level of rates
  • Expect an acceleration of QE to flatten the curve; flow dynamics and bond scarcity concerns likely to overwhelm repricing of higher inflation expectations
• In the periphery, favor being long the best carrying parts of the curve, such as 5s or 7s
• Selling RXJ6C calls with strike above 164 attractive, given the elevated level of vol and outlook for Germany 10Y

(To subscribe to EU Credit Daily, click here and set alert by clicking ‘"Display & Edit’’) By Simon Ballard (Bloomberg) -- Thursday’s mixed picture in global equities seems to be a fair characterization of generic sentiment across risk assets. Credit spreads may look appealing after recent selloff and some investors may deem this a buying opportunity, but such is the overhang of uncertainty over global growth and rates, that many others prefer a defensive position for now, Bloomberg strategist Simon Ballard writes.

• The mkt has rallied back a long way though from flirting with the 500 lvl on iTraxx Crossover just a week ago; cash bonds have also performed strongly, with EUR HY OAS gapping in >30bps, albeit with traders still bemoaning a lack of secondary mkt liquidity
  • Speed and magnitude of recent recovery may be another reason to doubt the sustainability of these tighter lvls, in absence of meaningful improvement in underlying fundamentals
• GBP credit mkt may be susceptible to headline risk today as EU leaders’ summit concludes in Brussels; Brexit risk has fueled YTD underperformance of GBP IG credit relative to EUR IG

• Risk Appetite model highlights degree to which mkt pricing has strengthened, but with higher associated volatility
• CDX IG is currently +0.6bps at 116.62 in overnight session; iTraxx Asia Ex Japan IG is currently +0.2bps at 162.30

NEWS

• Corporate News
• Aegon Fourth-Quarter Profit Gains 20% on Investment-Income Rise
• Apple Reports Full-Year Group Earnings Results
• China Coal Miner Defaults on Convertible Debt as Prices Sink
• Coca-Cola HBC 2015 Rev., Comparable Ebit Beat Ests.

• Financial News
• Allianz Says Fourth-Quarter Profit Rises, Misses Estimates
• Dexia Gets Capital Requirement of 8.625% From ECB; CET1 at 15.9%
• Standard Life 2015 Operating Pretax From Cont Ops Rises 9.4%
• Wall Street Banks Gorge on Treasuries and That’s a Warning Sign
• Top Chinese Banks Have Long Way to Go With Asian Expansions
• EFG Confirms Talks With BTG Pactual on Potential BSI Purchase

• Rating News
• India Bank Credit Profiles at Risk Without More Capital: Fitch
• New Singapore Telco Will Have Few Cost Advantages: Fitch
• S&P Affirms Cook Islands Rtgs At ’B+/B’, Otlk Stays Stable

• Other News
• Williams Sees Gradual Rate Rises as Economy Faces Headwinds
• EU Anti-‘Brexit’ Deal Goes to Wire as Cameron Meets Resistance
• Oil Trades Below $31 as Rising U.S. Crude Stockpiles Expand Glut

ANALYST VIEWS

• Equity markets seem to be taking cues from the selloff in credit, creating a staring match that could in itself worsen consumer sentiment and, in turn, dent economic growth: Barclays
• Low yields and returns, corporate cost cutting, pressure on corporate earnings, weaker investment/capex levels and increased potential for greater event risk -- we’re caught in a trap: creditmarketdaily.com
• Over the past week, investors maintained their preference for U.S.-related bonds (latest: US$5.9bn, seventh week of inflow) over non U.S.-related bonds geographically; they continued to acquire treasuries (US$1.6bn, seventh week of inflow) and (we’re) sidelined from high yield (-US$593mn, seventh week of withdrawal) and corporate bonds (-US$536mn): Jefferies

NEW ISSUES

• Amgen EU1.25b 6Y MS +110, EU750m 10Y MS +143
• State of Berlin EU250m 0.5% 2/2025 Tap MS -3
• DG Hyp EU500m Long 6Y Covered MS -2
• KfW GBP150m 1.125% 12/2019 Tap UKT +40
• Macquarie Bank EU500m 5Y Covered MS +40
• Roche Finance Europe EU650m 7Y MS +32
• Thames Water GBP300m 12Y Senior Secured UKT +190
• 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) -- USD/KRW non-deliverable forwards account for 50.0% of total volume today, according to trades reported to DTCC; USD/TWD second-most active at 20.9%, USD/MYR third at 9.2%.

• Notional amounts traded include:
  • $150m of USD/KRW at 1,237.967; matures March 23
• Total volume was $12.0b as of 2:47pm HKT; global total yesterday was $53.9b, with USD/BRL accounting for 21.2%