A volatile 2-stage session on the bond market, with an episode of intense tension from 8.00 to 3.05 p.m., followed by a sharp reversal from 4.30 p.m. until around 5.15 p.m., with the yield on our OATs, for example, falling by -4pts (and -6pts from the day's high).

Our OATs are down this evening by +1.5pts to 3.130% (vs. 3.1800% around 3pm), Bunds by +1.5pts to 2.39% (vs. 2.44% around 3pm), and Italian BTPs by +3.5pts to 3.662% (3.725% at the high).
The easing in interest rates was triggered by a wave of risk-offs in the equity markets (the Nasdaq lost up to -2.4%, the Euro-Stoxx50 -1.5%).

The surge in interest rates materialized despite the publication of a reassuring provisional inflation estimate by Insee: consumer prices in France were forecast to rise by 1.2% in October 2024, a slight increase on the 1.1% annual rate recorded in September.

The annual inflation rate for the eurozone is estimated at 2% in October 2024, up from 1.7% the previous month, according to a flash estimate published by Eurostat, the European Union's statistical office.

'Due to a low basis of comparison, the inflation rate will recover. It had fallen to 1.7% year-on-year in September and could return to around 2%. Underlying inflation, on the other hand, should continue to erode", said Oddo BHF for the eurozone.

In the USA, inflation figures were also eagerly awaited at 1:30 p.m.: the 'PCE' index - closely watched by the Fed - was down 0.2 points on August, at 2.1% unadjusted, but stable at 2.7% underlying (excluding energy and food).
T-Bonds continued to deteriorate over the next 90 minutes, with the '10-yr' reaching 4.337% at around 3.00 pm.

The Commerce Department, which publishes these figures, also reports that US household spending rose by 0.5% in September compared with the previous month, while household income rose by 0.3%.... again, this is in line with the consensus, and consumption remains very robust (there's talk of a "wealth effect" maintained by Wall Street).

The last "stat" was of minor importance: the Labor Department announced that it had recorded a drop of -12,000 new registrations for unemployment benefits in the USA - to 216,000 - last week.000- last week.

The four-week moving average - more representative of the underlying trend - came out at 236,500 for the week of October 26, down 2,250 on the previous week, an insignificant difference which can in no way explain Wall-Street's depressed mood.

On the other hand, the fall in US indices goes a long way towards explaining the easing in yields that followed in mid-afternoon.
Despite this upturn, the US '10-yr' fell by +2.2pts to 4.287%, the '2-yr' by +1pt to 4.165% (after testing 4.200%, its worst score since August 1), while the '30-yr' climbed back above 4.500%.

The day was also marked by a plunge in British Gilts, which reached +22pts to 4.575% before easing off a little, but the toll remained high, with +15pts to 4.5010% (the equivalent of the US 30-year, the worst score since October 29, 2023): the situation is becoming frankly alarming in the UK, where the drift has reached +42pts since October 17 and +80pts since September 17.




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