On the eve of the publication of the U.S. PCE (the Federal Reserve's preferred price indicator), the bond markets are feeling a little reassured.

The decline in US indices on Wall Street (Dow Jones down -1%, 6th fall in 8 sessions, Nasdaq down -0.3% to -0.6%) is finally fuelling a small wave of precautionary buying of US T-Bonds.

The '10-yr' is easing by -6.3pts to 4.5500%, the day after a +10pt rally and a +5pt rise in the '2-yr', back in touch with 5%.

Treasury yields only really fell back after the publication of a sharp decline in US gross domestic product (GDP), which fell to an annualized rate of 1.3% in the first quarter of 2024, according to a second estimate from the Commerce Department, after a rate of 1.6% indicated in the very first reading.
This downward revision makes the contrast all the starker, given that US growth had reached +3.4% in the final quarter of 2023.

This deceleration mainly reflects that of consumer spending, exports, federal and local government spending.

The Labor Department, for its part, announced that it had recorded an increase of +3.000 (to 219,000) in new US jobless claims for the week ending May 20.
The four-week moving average - more representative of the underlying trend - came in at 222,500, a rather anecdotal rise of 2,500 on the previous week.

Lastly, the number of people receiving regular benefits rose by 4,000 to 1,791,000 in the week to May 13, the most recent period available for this statistic.

A timid improvement was seen in Europe, following one of the worst sessions of the year, when inflation in Germany rebounded from +2.4% to +2.8% in May.

Nothing spectacular, since after a +10 to 12 basis point rise the previous day, the yield on Euro-denominated Treasuries fell by a symbolic -2.5 basis points (to 3.149% for our OATs, 2.665% for Bunds), and Italian BTPs erased -5 basis points to 3.956%.
UK Gilts are down -6.5Pts at 4.3900%, after Wednesday's annual record of 4.36%, the worst score since the end of October 2023.
The slight easing of interest rates has restored some color to the ounce of gold (at $2,345 vs. $2,338 the previous day), while Brent crude oil is down -0.8% in London, at $82.8.

Copyright (c) 2024 CercleFinance.com. All rights reserved.