(CercleFinance.com) – (CercleFinance.com) -New session of marked deterioration on the European bond markets, in the absence of significant statistics on the old continent: Italian BTPs tend by +6.2 Points (towards 3.592%) , our OATs of +8Pt towards 3.293%, the Bunds adding +5.6Pts to 2.4230%.
The OAT/Bund spread further widens to +87Pts 'all round', which reflects the exacerbation of doubts in France's ability to resolve its deficit problems in 2025 (and incidentally, the Bayrou government will t will he be able to manage the country's problems or will he be censored by presenting the 2025 budget in mid-February, against the backdrop of a $340 billion program? of OAT issuance, the deficit being anticipated at 5.4%).
The sell-offs accelerated after the publication of a more robust manufacturing ISM than expected in the United States (the day before, it was the low level of US unemployment which had weighed down US T-Bonds).
US T-Bonds managed rather well the surprise caused by the publication of leading activity indicators (manufacturing ISM) which foiled expectations: 10- and 30-year T-Bonds ended unchanged at 4.575% and 4.800% respectively.
Expected to contract, the Institute for Supply Management index rose sharply to 49.3 for the past month, compared to 48.4 in November (Jefferies anticipated a decline to 47).
This surprise rise in the ISM index contradicts the manufacturing PMI index revealed the day before by S&P Global, which for its part fell slightly, going from 49.7 to 49.4 from one month to the next.
This is a figure which reinforces fears that rates will only fall once in the United States, the FED having already warned on December 18 that the economy remained very robust and the inflationary risk not completely under control.
Conversely, faced with a Europe suffering from an economic situation close to stagnation, the ECB should reduce its key rates at least 3 times in 2025.
But today, the fall in OATs does indeed seem to betray a nervousness on the part of our creditors regarding the political situation in France.
Across the Channel, 'Gilts' are tightening a little more (+1.5Pt) and now reach 4.6500%… but it is less worse than in the Euro zone.
