(CercleFinance.com) – After a calm start to the day, things are heating up this evening on the bond market, with T-Bonds soaring by +8 points towards 4.700% (+6.5 points this evening at 4.681%).
After crossing 4.300% on December 18, the resistance of 4.65% (which dates back to the end of April 2024) seems to be giving up.
Yields soared as soon as the ISM US ‘services’ index was published at 4 p.m.: the contagion quickly spread to the European markets.
This evening, investors in US ‘treasuries’ no longer seem to be expecting the slightest rate cut by the FED before next July (just before the summer break and the Jackson Hole meeting).
Everything therefore changed with the ISM: growth in activity in the ‘services’ sector in the United States accelerated more than expected, from 52.1 to 54.1- in December, the survey shows. monthly from the Institute for Supply Management.
The sub-index measuring activity in the tertiary sector rose to 58.2 from 53.7 in November, while that of new contracts improved to 54.2 from 53.7 the previous month.
That of employment fell to 51.4 against 51.5 in November, prices paid having accelerated to 64.4 after 58.2.
Another US figure, but without much impact (published at 2:30 p.m.): the US trade deficit widened by +6.2%, to 78.2 billion dollars in November (compared to 73.6 billion the previous month , a score close to the initial estimate of 73.8 billion), according to the Department of Commerce.
This deterioration results from a 3.4% increase in American imports of goods and services, to $351.6 billion, therefore surpassing a 2.7% increase in exports, to $273.4 billion.
In Europe, while trade was balanced (insignificant variations), the bond markets lost after 4 p.m. all the benefit of the ‘good’ inflation figure in Europe published in the morning: our OATs erased their Monday gains with +3.7 points at 3.3000%, Bunds show +2.5Pt) at 2.474%, Italian BTPs tend by +5Pts to 3.627%.
The ‘figures of the day’ are not in question: inflation in the Euro zone came out as expected – at 2.4% in December 2024, compared to 2.2% in November according to a rapid estimate published by Eurostat, the statistical office of the European Union.
Looking at the main components of eurozone inflation, services are expected to see the highest annual rate in December (4.0%, compared to 3.9% in November), followed by food, alcohol & tobacco (2.7%, stable compared to November), industrial goods excluding energy (0.5%, compared to 0.6% in November) and energy (0.1%, compared to -2, 0% in November).
Furthermore, in November 2024, the seasonally adjusted unemployment rate in the eurozone was 6.3%, stable compared to the rate recorded in October 2024 and down compared to the rate of 6.5% recorded in November 2023.
The EU unemployment rate was 5.9% in November 2024, also stable compared to the rate recorded in October 2024 and down from the rate of 6.1% recorded in November 2023.
But the ‘fact of the day’ is across the Channel, it is the disintegration of the British ‘Gilts’ which continue to sink into crisis: nothing is going well with a ’10 years’ which displays +12, 3Pts and which exceeds 4.7350%, worst score in 25 years (in fact since 1998).
