The news on the employment front is not always the same. Indeed, the ISM Purchasing Managers' Index (PMI) for the non-manufacturing sector (i.e. Services), which measures employment conditions among a panel of US companies, came out in expansionary territory at 51.1, against a forecast of 46.4. As for new weekly jobless claims, they remained below the 250k threshold, allowing the US 10-year yield to rebound. It should be borne in mind that a fall in yields against a backdrop of falling inflation is good for the equity market, while a fall in yields due to fears about economic growth is bad for equities. In the current context, a rebound in bonds is therefore viewed positively and has enabled the S&P 500 to stabilize. However, a return to the 5400 zone, on a closing basis and ideally with volume, will be needed to restore color to the equity market as a whole. On the other hand, a breach of the 5055/35 level, which more or less corresponds to the 200 stock market moving average, would be a tangible sign of the risk of recession, synonymous with renewed selling pressure for several months. Of course, this is not where we stand, and we regard the current movement as a "normal" breath of fresh air within an uptrend that has been underway since the start of the 2022 school year.

On the bond front, the US 10-yr has indeed bounced back nicely, thanks to a bullish Japanese candlestick pattern (hammer) which we reported on last week. The 3.92/4.00% target has now been reached, and should give rise to a fierce battle. A further easing below this level towards 3.50% is favored. It remains to be seen whether this will be accompanied by renewed recessionary fears or a further fall in inflation. We'll have the answer this week with Wednesday's annualized CPI, expected in its "ex-food and energy" version at +3.2% in July, compared with +3.3% in June.