Tuesday's session was rather positive in the Eurozone (from start to finish), while T-Bonds were more hesitant and yields retreated marginally, until the end of the afternoon, marked by a return of buyers and a symmetrical decline from -2 to -5Pts (towards 3.9050%).

Since Friday, several Fed members have tried to temper Wall Street's euphoria by judging market expectations to be too optimistic... but they are not being 'heard' and the US indices continue to advance stubbornly, as if the warnings were just a smokescreen.

Last Friday, New York Fed President John Williams declared that it was "premature" to consider a Fed rate cut as early as March.

His counterpart at the Atlanta Fed, Raphael Bostic, warns that there is nothing "imminent" about an easing of US Fed monetary policy, and that in his own judgement, the Fed would do better to content itself with 2 rate cuts to ensure sustained control of inflation.

Conversely, some investors are going so far as to envisage eight to ten rate cuts in 2024, a scenario considered exaggerated by some given the persistence of inflation... but they believe that prices will fall well beyond current expectations.

On the economic front, the upturn in housing starts (+14.8%) shows that the US real estate market is behaving paradoxically: first-time buyers are absent, no one is selling their property to buy another at rates twice as high (a shortage situation), so solvent buyers are building homes to their liking, and prices are being driven up, rather than down as the FED expected (perhaps this will happen in 2024).

In fact, US housing permits - which are supposed to be a precursor of future housing starts - fell by 2.5%.

The rest of the week will be marked on Friday by the release of the US PCE inflation index - closely watched by the Fed - which will be the highlight of the week.


In Europe, the German Bund treaded water all day, ending at 2.023% (+1Pt), our OATs at 2.523% (-2Pts), Italian BTPs erased -13Pts to 3.635% and Spanish Bonos fell back below 3%, with a -5Pt easing to 2.961%.
British Gilts stood out with a symmetrical +5Pts tension to 3.7050%.
Oil rebounds +1.5% to $79.2 for Brent, while transport costs increase with the refusal of shipowners to cross the Red Sea to use the Suez Canal: 20,000Km of laps, an extra month of navigation, delivery delays to be expected which will certainly affect the supply chain and put pressure on the prices of many spare parts.


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