This is the high point of the day: Donald Trump granted a 45-minute duplex with the Davos Forum and the bond markets will essentially remember this sentence ‘I demand that interest rates fall immediately’, which constitutes a deliberate failure to respect the independence of the FED.
But this is not the first time that Donald Trump has engaged in this type of provocation towards Jerome Powell, and his ‘demand’ has almost no chance of being followed up.
But if the FED were – in response – openly ‘non-cooperative’, this could also worry Wall Street… which shows no emotion this evening because this kind of ‘Trumpism’ was commonplace during his first term.
If rates are tightening this Tuesday, it is not because of Donald Trump’s ‘abrupt’ remarks, the deterioration was already well advanced before he spoke.
With the return of appetite for risk which has taken the stock markets to new heights over the past ten days (the ‘S&P’ crossed 6,100 on Wednesday evening and broke a new absolute record), bonds exercise little attractiveness, which leads them to continue their recent episode of consolidation.
The yield on ten-year Treasuries deteriorates by +5 points to 4.648%, the ’30 year’ shows +6.5 points at 4.880% (level no longer revised since mid-January).
On the macroeconomic side, the ‘figure of the day’ concerned weekly unemployment registrations: the Department of Labor announced that it had recorded 223,000 new registrations for unemployment benefits in the United States the week of January 13, a figure up 6,000 compared to the week previous.
The four-week moving average – more representative of the underlying trend – stood at 213,500, an anecdotal increase of 750 compared to that of the previous week.
No figures on the agenda this Thursday in Europe: the yield on the ten-year German Bund rises by +2 points to 2.5190% while that of the OAT of the same maturity deteriorates by +3.7 points to 3.301% , i.e. a France/Germany ‘spread’ of 78 points.
Further south, Italian construction deteriorated by +5.3% to 3.653%.
Finally, across the Channel the ‘Gilts’ are increasing by +5.6 points towards 4.6900%.
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