The behavior of our bond market is reassuring on the eve of the second round of parliamentary elections, with OATs in high demand in the wake of a highly successful issue by France Trésor (bid-to-cover ratio more than twice the amounts auctioned).

Our OATs have eased by -7pts to 3.2100% (-8pts hebdo), while Bunds have erased -5.5pts to 2.5300% (+4.5pts hebdo: the spread has contracted by -10pts this week, to just under +68pts).

However, French macro figures are not good: in May, production was down sharply month-on-month in both manufacturing (-2.7% after +0.5% in April) and industry as a whole (-2.1% after +0.6%), according to Insee's CVS-CJO data.

Furthermore, in May 2024, France's trade balance deteriorated once again, according to CVS-CJO data from the customs administration, with the deficit widening to 7.99 billion euros from 7.56 billion the previous month.
But Germany is not faring any better, with a -2.5% fall in German industrial output in volume terms in May, according to Destatis (which confirms a stagnation in April).

Figures again, with the long-awaited 'NFP': once again, it stands out as a 'non-event'.
Job creation was in line with expectations: the US economy generated 206,000 non-farm jobs in June, according to the Labor Department (consensus +200,000/+210,000).

The unemployment rate rose by 0.1 points to 4.1%, where economists were expecting only 4%, while the labor force participation rate stood at 62.6%, and average hourly earnings rose at an annual rate of 3.9%.
On the other hand, non-farm payrolls for the previous 2 months were revised sharply downwards, from 165,000 to 108,000 for April and from 272,000 to 218,000 for May, for a total revision balance of -111,000.

US T-Bonds ease -7pts to 4.2760%, the '30-yr' erases -4pts to 4.4800%.

IN THE UK, Labour's unsurprising victory in yesterday's general election, ending 14 years of Conservative rule, was greeted with relative relief by the markets, with 'Gilts' easing -3.5Pts to 4.1650%.


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