The interest-rate markets were flat on Monday, ahead (24 or 48 hours) of the meetings of the US Federal Reserve (FOMC on 12 and 13/12), the European Central Bank (ECB on 14/12) and the Bank of England (also on Thursday).
Bunds and OATs remained frozen at Friday's levels (2.268% and 2.82% respectively), as did Italian BTPs.
It was a bad day, however, for UK Gilts, which saw their yield jump by +7.5pts to 4.116%.

And this had nothing to do with any contagion from '10-year' T-Bonds, which only shifted by +2.3pts to 4.271%, with the '30-year' posting at worst +3.5pts to 4.361%.

The major central banks have recently ended their rate hike cycle, but their more accommodating approach does not seem sufficient in the eyes of investors, who are now anticipating rapid rate cuts, convinced that Mr. J.Powell or Ch.Lagarde are the "unfailing allies of the markets".

Friday's publication of better-than-expected employment figures for November confirmed the scenario of a "soft landing" for the US economy, making monetary easing less urgent... but that's already forgotten, as other less robust figures are expected over the next few days.

In Europe, where one disappointing figure follows another, the ECB is being urged to do more in the face of an economy that is undeniably flirting with recession (-0.1% GDP according to Eurostat).

"The markets consider that the first rate cuts could come as early as March, and that the ECB could make almost six 0.25% rate cuts in 2024", notes Alexandre Baradez, Head of Market Analysis at IG France.

For the strategist, these expectations are probably too aggressive, given that underlying inflation in the eurozone is currently hovering around 3.6%, still far from the central bank's 2% target.

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