US and European bond markets seem to be moving in opposite directions, and for very different reasons: risk-on is in full swing on Wall Street in the wake of the Thanksgiving/Black Friday "bridge", with 2 new all-time highs for the S&P500 and Nasdaq, while risk-off is the order of the day in Europe, due to political uncertainty in the Hexagon.

The suspense is at its height as Michel Barnier has just unleashed the Art.49.3 to pass the 2025 "social security" budget... with the RN announcing that it will vote for the motion of censure tabled by the LFI group if the government does not reverse the non-indexation of pensions, and will table its own motion to be discussed this Wednesday.

And to make matters worse, the economic outlook remains gloomy on the Old Continent: S&P Global's HCOB PMI index for manufacturing in the eurozone fell from 46 in October to 45.2 in November, a more pronounced deterioration than expected.

It's even worse in France: the PMI HCOB index for French manufacturing industry continues to signal a deterioration in the sector's economic situation, and at the highest rate since December 2023, having fallen from 44.5 in October to 43.1 in November.

The good news for France is that S&P has decided to maintain its rating on French debt... but the OAT/Bund spread has widened sharply from +7.5pts on Monday to +88.5pts due to the political factor: our OATs have deteriorated by +2pts to 2.916%, while Bunds have eased by -5.5pts to 2.0330%.

Note: the Greek '10 yr' confirms its attractiveness with a yield of 2.913% (-1.2 basis points), and even 2.8700% at Monday's low.
The Italian '10 yr' continues to close in on our OATs, at 3.2600% vs. 3.282% on Friday.

Across the Atlantic, confidence in Trump's expansionary policies is propelling the US 10-year T-Bond towards 4.205% (+1Pt), with the '2 yr' up +2.5Pts to 4.2000% (the curve is once again inverting).

Wall Street also welcomed 2 good activity figures: the Institute for Supply Management's monthly manufacturing survey (ISM) released on Monday came in at 48.4 last month, up 1.9 percentage points on the 46.5 recorded in October, while economists were expecting an average index of 47.6.

The new orders sub-index jumped to 50.4 from 47.1 in October, while the prices paid sub-index fell to 50.3 from 54.8 the previous month.
The employment sub-index rose to 48.1 from 44.4 in October.

The US manufacturing PMI - calculated by S&P Global - recovered to 49.7 in November from 48.5 the previous month, and thus fell slightly below the 50 threshold which marks the boundary between expansion and contraction in the sector's activity.

S&P Global points out that a sharp slowdown in the decline in new orders played a central role in this near-stabilization of manufacturing activity, with manufacturers pointing to improved domestic demand following the presidential election.

Although production fell again last month, manufacturers' production outlook for the year ahead has improved significantly, with companies in the sector hoping for favorable measures from the future administration.
The 'NFP' is expected this Friday: the consensus is for 200,000 jobs to be created in November, after the 12,000 announced in the first estimate for October.000 announced in the first estimate for October, and on an unemployment rate of 4.2% versus 4.1%.

The statistic - particularly closely followed by the Fed - should help it to determine the timing of its next rate cuts, bearing in mind that a 25 basis point easing on December 18 is integrated by 67% of investors, according to the CME's FedWatch tool.


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