It's almost a relief for our Treasury bonds, which are enjoying a somewhat unexpected upturn, not only in terms of 'pre-censure' but also 'relative' to Bunds and other Euro-denominated instruments.
The adoption of the motion of censure aimed at toppling the Barnier government was an archetypal example of a 'non-event', a scenario widely anticipated.

The yield on French OATs fell by -1Pt to 2.885% in 24 hours, while the German Bund dropped by +5.8Pts to 2.113%, meaning that the yield differential between Germany and France fell well below 80 basis points (almost -10Pts in 1 week).
Note the further easing of Italian BTPs, which see their yield fall by -1.3Pts to 3.20% (i.e. less than 110Pts spread against the Bund and 32Pts against our OATs.

If the overthrow of the government has the effect of opening up a new political period of uncertainty, analysts are counting on a continuation of the ECB's rate easing cycle (not to mention the supposed support for our OATs in the event of "tensions").
In the United States, Jerome Powell expressed confidence in the outlook for growth in 2025... and indicated that he had underestimated the robustness of the US economy in September, when the FED adopted the -50Pts start to its rate-cutting cycle.
Investors continue to expect a further 25 basis points of easing on December 18, with the consensus at 75%.

Despite this, US T-bonds are down +2 basis points at 4.202%, and the 2-year at +5 basis points at 4.171%.
This tension seems little explained by the day's US statistics: the US trade deficit fell sharply (-12%) to $73.8 billion in October, compared with the previous month's $83.8 billion (which was revised from an initial estimate of $84.4 billion), according to the Commerce Department.

This month-on-month decline resulted from a 4% contraction in US imports of goods and services, to $339.6 billion, outstripping a 1.6% drop in exports, to $265.7 billion.
On the eve of the release of the NFP, the Labor Department announced that 224,000 new jobless claims had been registered in the US.000 new jobless claims in the US last week, up 9,000 on the previous week.

The four-week moving average - more representative of the underlying trend - stood at 218,250 for the week to November 30, up 750 on the previous week.

Finally, on the eve of the publication of the 'NFP', the number of people receiving regular benefits fell by 25,000 to 1,871,000 in the week to November 23, the most recent period available for this statistic.
Across the Channel, the 'Gilts' experienced another 'difficult' session, with a sharp +8Pts decline to 4.328%.


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