In a mixed context, the bond market has tightened. The 10-year US bond ended the week at 4.40% and the German Bund above 2.5%.
Stock markets posted mixed performances last week. European indices fell, undermined in particular by political events in France, while American indices remained stable.
In this context, the bond market has tightened. The US 10-year ended the week at 4.40% and the German Bund above 2.5%.
The economic situation is slowly deteriorating in the United States due to interest rates that remain high. Thus, the labor market no longer displays the same solidity as shown by the new weekly registrations for unemployment benefits which now regularly exceed 230,000.
On the inflation front, prices stabilized in May over one month and even showed a deceleration on an annual basis. Indeed, the PCE consumer price index was stable, after an increase of 0.3% last April. Over one year, the price index decelerated to 2.6%, in line with forecasts, after an increase of 2.7% in April.
The core PCE inflation index, excluding energy and food, also slowed to +0.1% in May, in line with expectations after increasing by 0.3% in April. Over one year, the core index rose to +2.6%, in line with expectations after +2.8% in April.
Finally, household consumption spending, the engine of the American economy, increased by 0.3% after a decrease of 0.1% in April, while household income increased by 0.5% in May after +0.3% in April.
The Fed is expected to end up lowering its key rates before the end of the year in order not to cause too marked a slowdown in its economy.
In Europe, German consumer sentiment deteriorated slightly in June, ending a four-month streak of gains, amid gloomy inflation uncertainty and an economy that is slow to recover after encouraging early signs of recovery. The consumer confidence index stood at -21.8, compared with -21 in June.
The German unemployment rate remained stable at 5.8% compared to May. At this stage, economic players remain reluctant to seek new employees. The ECB’s monetary policy has not yet benefited activity in Europe, which is highly dependent on external demand. However, continued monetary easing is likely to inject more positive economic momentum.
In this context, the S&P500 index contracted by -0.08%, the Nasdaq technology index grew by +0.24% and the Stoxx 600 Europe fell by -0.72%.
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