Looking at the strength of the stock market indices on Thursday, it would seem that short and long rates are under considerable pressure in the United States... and in the Eurozone.

T-Bonds remain in the red (+3pts to 4.1350% on the '10-yr', with the '2-yr' peaking at 4.35%) after the publication of the 'figures of the day', which are rather contradictory in the USA, with a fall in the Philly FED activity index (expected at -7, it comes out at -10.6) which is contradicted by a sharp fall of -16.000 new jobless claims in the US in the week from January 8 to 13, to 187,000, one of the lowest scores in 50 years (worthy of the purest 'full employment').

According to Labor Department figures, the four-week moving average - more representative of the underlying trend - came in at 203,250 for the same week, down by 4,750 on the previous week's revised average.

Finally, the number of people receiving regular benefits fell by 26,000 to 1,000,000.000 to 1,806,000 in the week to January 1, the most recent period available for this statistic.

And don't forget the +1.9% rise in US building permits (to 1.495 million), while housing starts (-4.3%) fell less than expected, to 1.46 million against an estimated 1.43 million.

The U.S. real estate sector continues its mixed trend, with the recent easing of interest rates failing to revive demand held back by historically high prices and low inventories.

The enduring resilience of the US labor market is likely to justify more intransigent rhetoric on the part of FED members, who are keeping a close eye on inflation (the figures are moving in the right direction) and employment (lots of employees = lots of purchasing power and a risk of price pressure).
On the European fixed-income markets, market participants also had to digest ECB President Christine Lagarde's speech on the sidelines of the Davos economic forum: she dashed hopes of a rate cut this spring, and instead spoke of a "probable" rate cut in June.
The heaviness of the bond market is also confirmed in Europe, where the yield on the ten-year German Bund - the benchmark for the eurozone - has risen by +3.5pts to over 2.3070%.
Our OATs are also up +3pts to 2.8380%, the Italian 10-year is stabilizing (at around 3.9050%), with the BTP capping below 3.91% after +8.5pts the previous day.
The only ray of light comes from across the Channel, where Gilts are easing against the tide of T-Bonds and OATs, down -2pts to 3.965%.


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