What Monday's session did, Tuesday's will undo: yesterday's upturn in the bond market did not even last 24 hours in Europe, as yields retrenched by an average of +4 basis points.
Our OATs fell by +5pts to 2.773%, Bunds by +4pts to 2.2680% and Italian BTPs by +5pts to 2.7940% (Italian GDP growth rose by +0.7% in Q4).
Yet the GDP figures are not good: in France, GDP remained stable in the fourth quarter (-0.02%), according to data published this morning by Insee, having already remained unchanged in the third quarter. On average over 2023, French GDP rose by 0.9% (after +2.5% in 2022 and +6.4% in 2021)... and the government is clinging to a forecast of +1.4% in 2024.
Across the Channel, Gilts deteriorated sharply by +6pts to 3.936%.

In the USA, 10-year T-Bonds stabilized at 4.085% on the eve of the FED press conference, while 2-year bonds rose by +5pts to 4.372%.

According to Christopher Dembik, Investment Strategy Advisor at Pictet AM: "Even if there are uncertainties about the evolution of monetary policy, which are likely to be confirmed by the Federal Reserve this week, investors consider that the economy is sufficiently solid and that corporate results are on target", adds the analyst, who considers equities "resilient and unavoidable".

While there is little doubt that the Fed will maintain the status quo tomorrow, market participants will be looking to Chairman Jerome Powell's speech for clues as to the timing of future rate cuts.
In the meantime, the Jolts report on US job vacancies came in above expectations: 9.026 million jobs were unfilled in December, compared with 8.925 million in November.
Still on the employment front, the 'ADP' report (private sector employment) will be published tomorrow, a good precursor to Friday's release of the monthly US employment report (NFP), which will provide further information on the US economy.


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