2023-09-26 15:48:03
Still no signs of improvement on the bond markets which continue to slide imperceptibly towards new annual lows.
Investors are starting to accept as possible that they will have to endure ‘higher for longer’ rates from the US Federal Reserve and probably the ECB (which must ensure that the most indebted countries can refinance themselves).
The optimism regarding the scenario of a ‘soft landing’ of growth, which until recently carried the markets, has given way to a bout of caution given the surge in government bond yields in the wake of the rise in inflation expectations.
The yield on 10-year Treasuries continues to flirt with ‘highests’ since 2007 (4.5420% at 5 p.m. after 4.569% intraday).
The ‘number of the day’ will not dispel fears of a flirtation with recession in 2024: American consumer confidence has deteriorated to 103, compared to 108.7 last month (much higher than expected in September) to reach levels indicative of an upcoming recession.
The Conference Board indicates, however, that the component of consumers’ judgment of their current situation has recovered slightly, to 147.1 against 146.7 last month, that measuring their expectations fell to 73.7 against 83.3 in August …and it is this last variable which is the most striking.
The other concern is the FED’s unprecedented issuance program of $1,000 billion/month: we will have to attract capital with increasingly generous returns, because Europe is also in great demand for capital (notably Italy and France).
No notable figures in Europe but the 10-year German Bund is flirting with 2.80% (2.82% at its highest intraday), our OATs also deteriorated by +1Pt to 3.352% (and 3.376% around 5 p.m.), Italian construction stands out – unfortunately in an alarming way – with +7 points at 4.733%, an ominous annual record.
Across the Channel, Gilts are not doing too badly with +3Pts at 4.355%, the situation appears less tense than in Italy, it was the opposite 1 month ago.
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