Market News

The good inflation figures published at 2.30 p.m. (the US PPI came out 'wiser' than expected) did not even reassure T-Bond holders.
In fact, the opposite was true, since at 2.31 p.m., the '10-year US' had risen from 4.79 to 4.82%.
Tonight, the '10 yr' is +1.2pts at 4.802%, the '30 yr' +1.5pts at 4.9920%.

The Labor Department reports that US producer prices rose by 0.2% in December compared with the previous month, and by 0.1% excluding food, energy and business services (in line with the most optimistic forecasts).
Expressed as an annual variation, the rise in producer prices accelerated last month compared with November (+0.3 points to 3.3%, instead of 3.5%) in unadjusted data, but slowed (-0.2 points to 3.3%) excluding food, energy and commercial services (a score of +3.5% was expected).
But from now on, we'll be keeping a close eye on oil prices, with Brent crude attacking the $81 resistance level (WTI unsuccessfully testing $78 and falling back towards $77): oil is now trending out of its long-term downtrend channel (exit from $125 in April 2022).

Investors would have been reassured by reports circulating across the Atlantic that Trump's teams are preparing "a plan for progressive imposition" of tariffs... but this is clearly not the case.

As a reminder, this issue has been preoccupying the markets since the election of the Republican, raising fears of the return of a trade war that would impact, among others, European exporting companies.

While waiting to find out more - Trump will be inaugurated on January 20 - the markets will take note this Wednesday of US consumer price figures, which could give some indication of the Fed's interest rate trajectory.

Retail sales for December, expected on Thursday, will also offer an interesting insight into the current state of the economy across the Atlantic.

If one-year core inflation exceeds the consensus of 3.3% and retail sales grow less than the 0.6% the market is hoping for, expectations of a slowdown in Fed rate cuts will strengthen, which would support the dollar and push the yield on ten-year Treasuries above the 4.80% mark", warns Michael Brown, strategist at Pepperstone.

In Europe, there were no major figures, but nothing good on the rates front: ten-year Bunds gained +4pts to 2.632%, while French OATs added just +1.3pts to 3.4700%... after François Bayrou's general policy speech failed to raise an outcry in the opposition (it could escape censure), reducing the France/Germany spread from 87pts this morning to 84pts this evening.

Finally, across the Channel, Gilts tightened by a further +0.6Pt to end the session at their worst level for the year, and indeed for 26 years, at 4.9610%... but "something" is still preventing the UK 10-yr bond from reaching the symbolic 5.000% mark.