(CercleFinance.com) - The initial upturn on the fixed-income markets failed to last, and the results of the session are more than mixed. After recovering the previous day from one of their worst sessions since October 2023 on Tuesday, the rebound stalled at 9 a.m. on Thursday.
Yields then stagnated until around 2.30 p.m., before easing throughout the afternoon in both Europe and the U.S.

The yield on 10-year Treasuries fell to 4.242% (-2pts vs. -6pts this morning), while the German Bund stagnated at 2.3500%, our OATs deteriorated by +1.5pts to 2.842%, and Italian BTPs erased -3pts to 3.8650%.

The experts in Brussels have just lowered their growth forecasts for the Eurozone from +1.2% to +0.8% in 2024, and the inflation outlook has also been revised to +2.7% from +2.9% in 2024 (and to +2.2% in 2025).

US growth continues to surprise with its strength in most sectors - hence the easing of rates - with the notable exception of retail sales, which clearly disappointed by falling more sharply than expected (-0.8%) in January.
But this was offset by all the other figures of the day: manufacturing activity recovered spectacularly in New York State in February, as the local Fed's 'Empire State' index climbed 41 points on January to stand at -2.4.

In the details of the survey, new orders fell slightly, while shipments rose slightly. Employment levels were little changed, while the average working week decreased.

The pace of input price rises accelerated for a second consecutive month, and that of selling prices also picked up. The six-month outlook improved, although optimism remained subdued.
The Philly Fed Index returned to positive territory with a gain of +16 points in February, reaching 5.2, the first positive reading since August.
However, only 27% of companies responding to the survey reported an increase in activity this month (but this is better than the 16% in December).
The employment sub-component fell by 9 points to -10.3 in February, its lowest level since May 2020.

The Commerce Department reports a 0.4% increase in US business inventories in December 2023 compared with the previous month, following a 0.1% decline in November (confirmed vs. initial estimate).
US business sales also rose by 0.4% sequentially in December.
US industrial production, on the other hand, contracted by -0.1%, whereas it had been expected to rise by 0.2% after remaining stable in December (clear decline in construction with -0.9% and in mining with -2.4%). The production capacity utilization rate fell by -0.2% to 78.5% in January, compared with 78.7% in December... but Wall Street put these figures into perspective, as the service sector proved to be very resilient and created a lot of jobs.

New jobless claims fell (data closely watched by the FED): the Labor Department announced 212,000 new jobless claims in the United States for the week of February 5, a figure down by 8,000 on the previous week's revised figure (220,000 instead of the 218,000 initially announced).

The four-week moving average - more representative of the underlying trend - came out at 218,500 for the same week, up 5,750 on the previous week's revised average.

The majority of markets still think that the Fed will not cut rates before June, but the hypothesis of a cut as early as May does not seem totally ruled out (consensus at 40%) after today's statistics.



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