Eurozone bond investors may look for signs of increased central bank support next week as they prepare for the next wave of debt sales aimed at funding recovery efforts amid the crisis in the United States. coronavirus.
Germany and France will update their emission plans on Monday – and it remains to be seen whether they will stick to the targets set earlier in the year. The market will follow European Central Bank President Christine Lagarde’s speech to the ECB on Wednesday and her Watchers conference for clues about a possible extension of the institution’s pandemic bond buying program.
Such support has so far allowed German bonds to ignore the prospect of the October-December borrowing target being lifted from the initial estimate of € 44.5 billion (€ 52 billion. dollars). The country has already issued more debt than expected in recent quarters. Investors are also looking for another green bond from the country after its first sale of these notes this month, according to comments last month Joerg Kukies, German deputy finance minister.
“We will look at whether there is a reduction in supply for the fourth quarter and whether it will stick to the plan to introduce a new linker,” wrote Jan Weber Ostergaard, senior analyst at Danske Bank A / S, in a note.
Then, with a supply announcement, France, which will give advice on its emission plans for 2021. The nation unveiled a 100 billion euros stimulus plan earlier this month, 40% of which is expected to rely on EU funding.
The market will have a few days to absorb these supply plans ahead of the ECB Watches event, where speakers include ECB chief economist Philip Lane, Jens Weidmann, Francois Villeroy and Pablo Hernandez de Cos. The event was originally scheduled for March, before being postponed due to the virus outbreak.
The debt sales of the largest issuers in the euro area, including Germany, France, Italy, Spain, the Netherlands and Belgium, are expected to decline by 90 billion euros next year in due to an improvement in budget deficits, according to Société Générale SA. This was after 450 billion euros in deals were added to this year’s offering due to the coronavirus.
Eurozone issues due next week by the region’s four largest borrowers – Germany, France, Italy and Spain – are expected to total nearly € 30 billion, according to Danske. Spain could sell a 10-year bond through banks after skipping an opportunity this week, according to Mizuho International Plc.
- After Belgium has paid nearly € 18 billion in buybacks next week, the next such payment by a eurozone treasury is not expected until the middle of next month. Belgium also pays 2 billion euros in coupons, just like Italy which pays 500 million euros
- UK to offer £ 8bn of three, eight and 21-year securities next week and BOE to buy £ 4.4bn of debt over three deals
Data in Brief
Among the data releases for the week ahead, the eurozone flash estimate for September consumer prices could attract attention on Friday, after the gauge fell below 0% for the first time in four years last month. The median estimate from a Bloomberg survey is for another drop, which could put pressure on the ECB to avoid deflation risks.
The latest report will come after a measure of market-based price expectations – as measured by five-year and five-year inflation swaps – fell about 15 basis points from the peak of August.
Along with Germany and the United Kingdom, the bloc will release final manufacturing PMI figures for September on Thursday.
- Germany to release national and national inflation figures for September on Tuesday as well as unemployment figures for September on Wednesday
- Along with PMI data, the UK will also release final second quarter growth figures on Wednesday.
- Ahead of the ECB Watchers conference, Lagarde makes an appearance in the European Parliament on Monday, while Isabel Schnabel speaks at a sustainable finance summit in Frankfurt on the same day. Chief Economist Lane continues his speech at the Watchers conference by another Thursday and Robert Holzmann speaks on Friday
- BOE Governor Andrew Bailey addresses the Belfast Executive’s Club on Monday, for which no text will be published. Andy Haldane speaks at an economic summit on Wednesday, which will be accompanied by a text
- S&P Global Ratings rates Germany, France and Fitch Ratings rates Belgium on Friday