False alarm on Wednesday?
The European stock markets are up by +0.9% to 1%: the CAC40 is back at 7,390, the E-Stoxx50 at 4,440.
The CAC40 and Euro-Stoxx50's break-through of annual lows after 10 sessions of stagnation within a narrow channel is therefore not followed by any effect.
The sharp rise in short-term (2-year) and long-term interest rates in the United States could have had a far greater impact on Wall Street than the 0.5% lost on average the previous evening, but this was not the case.

Losses already largely wiped out on the Nasdaq (+1%) as soon as trading resumed, with the S&P500 recovering 0.4% on the 0.6% lost yesterday.


The "figures of the day" were rather contradictory in the USA, with a fall in the Philly FED activity index (expected at -7, it came out at -10.6), which was contradicted by a +1.9% rise in building permits in the USA (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 thus continues its mixed trend, with the recent easing of interest rates not enough to revive demand held back by historically high prices and low inventories.

But the big surprise came from the Labor Department, which announced -16.000 new jobless claims in the USA for the week of January 8 to 13, at 187,000, one of the lowest scores in the last 50 years (worthy of the purest 'full employment').

The four-week moving average - more representative of the underlying trend - came out at 203,250 for the same week, down 4.750 on the previous week's revised average.

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

The enduring resilience of the US labor market is likely to justify more intransigent rhetoric concerning the possible loosening of financial conditions by FED members, who are monitoring both inflation (the figures are moving in the right direction) and employment (lots of employees = lots of purchasing power and a risk of price pressure).
Christopher Waller, a member of the Fed's Board of Governors, points out that if inflation is heading towards the 2% target, this should not precipitate any rate cuts.

The participants also had to digest the speech made by Christine Largarde, President of the ECB, on the sidelines of the Davos Economic Forum.

She dashed hopes of a rate cut in the spring, and instead spoke of a 'probable' rate cut in June.

"The big question at the moment is whether 2024 starts with a logical hangover after an exceptional end to 2023, or whether we can expect a more difficult year ahead", sums up Jim Reid, market analyst at Deutsche Bank.

This context of uncertainty on rates has had an impact on US ten-year Treasuries, which continue to deteriorate: the 'ten-year' is up +2Pts (after +10% the previous day) and back above 4.1250%.

The heaviness of the bond market is also amplifying in Europe, where the yield on the ten-year German Bund - the eurozone benchmark - is up +3pts to above 2.3030%.
Our OATs are also up +3pts to 2.8380%, the Italian '10-yr' is stabilizing, with the 'BTP' capping below 3.91% after +8.5pts the previous day.

The dollar regained a little ground (+0.2% according to the $-Index) and the euro fell by the same amount to $1.0855.
A barrel of oil remained perfectly stable in London on Thursday, at $78, while gold fell by a further -0.5% to $2,013/Oz, i.e. -2.5% since January 1st.
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