(CercleFinance.com) – The improvement was quite massive on the US rate markets in the morning, based on polls reflecting a clear rise by Kamal Harris in the weekend polls (even if it is difficult to identify what communication stunt ‘turned opinion in his favor).
The US ‘2034’ T-Bonds erased up to 10 points of yield to 4.266% before reversing course and ending with a much more modest reduction of -4 points towards 4.327%.
Identical scenario for the ‘2 years’ going from 4.203% on Friday to 4.129% this Monday morning then 4.185% (barely -2 basis points).
The bets were made this Monday morning, so no link with the decline – revealed later – of -0.5% in orders to the United States industry compared to the previous month (revised compared to the initial estimate which was -0.2%) and which had also fallen by -0.8% in August according to the Department of Commerce.
For their part, deliveries by American industry decreased by 0.4% in September compared to the previous month. Finally, with inventories falling by 0.2%, the inventory-to-delivery ratio remained unchanged at 1.46 month-on-month.
The easing of rates comes from the differential in figures between the two programs if they were applied such as: $7,300 billion for Trump, $3,400 billion for Kamala Harris… which would therefore be less likely to widen deficits and revive inflation .
Note that the United States – and therefore the Democratic administration – increased the deficit by $620 billion in 5 weeks (and +9.7% in the 3rd quarter compared to 2023), a pace never observed since the Second World War. .
‘Neither candidate has announced that they want to reduce the federal budget deficit. In an economy already exceeding its potential, this can cause excess demand and pressure on prices, Oddo BHF highlighted last week.
Another highlight of the week, the Bank of England and the Federal Reserve will make their respective monetary policy decisions on Thursday, with a rate cut of 25 basis points being widely expected from the American central bank.
The collapse of US job creations in October (12,000 instead of 120,000 expected, the fall in ‘open’ offers (‘JOLT’ report weaker than expected by almost -400,000) could encourage the Fed to ease rates, even with GDP growth considered robust, at +2.8%.
The relaxation of rates in Europe ultimately turns out to be marginal with OATs relaxing by -1.5Pt towards 3.147%, Bunds ending little changed at 2.400% (-1.5Pt), Italian BTPs erasing -1 .8Pt at 3.664%.
The day’s figures did not constitute ‘market movers’: the PMI HCOB buyers’ index for the French manufacturing industry, produced by S&P Global, stood at 44.5 in October, relatively stable compared to September (44.6), but thus continuing to signal a sharp deterioration in the sector’s economic situation.
And still no improvement in the United Kingdom with a draft amending budget including tax increases: ‘Gilts’ are increasing by +6 points beyond 4.50%: this was considered a crisis level ago 1 year.
