There was a little suspense on Wednesday with the FED (-25 or -50Pts?), but there was none with the BoE, which left its key rates unchanged as expected.
Gilts continued the fall that began the previous day, their yield falling symmetrically by +8Pts to 3.93% (after +8.2Pts the previous day, and that makes +17Pts this week).

T-Bonds, unlike equities -literally euphoric with the Nasdaq-100 at +3%- are showing no signs of relief with the confirmation of a rate-cutting cycle.
The '10-yr' is tightening by +6Pts to 3.746%, the '30-yr' by +6.5Pts to 4.0750%: that's +10Pts and +11Pts in 48H respectively.

The US Federal Reserve decided - almost unanimously - to cut its main key rate by 50 basis points, in a range from 4.75% to 5%, while hinting at further cuts this year.%.

If the dot plots are to be believed, monetary policymakers are forecasting 2 further rate cuts of up to 50 basis points by the end of the year, ruling out further rate cuts as large as yesterday's, and continuing at a rate of -25 basis points per quarter into 2025 (ending at 3.25/3.50%).

The Fed also made few changes to its forecasts for US gross domestic product (GDP) growth, which point to an increase in activity of 2% for 2024, through to 2027.

As for US figures, optimists on Wall Street have reason to rejoice: manufacturing activity in the Philadelphia region rebounded more strongly than expected in September, according to the local Fed, its index of general current activity rising from -7 in August to +1.7 this month.

Among the survey's components, the new orders and shipments indexes fell and turned negative, while the employment index rose, suggesting overall job gains.

Both price indices are rising and continue to point to overall price increases.
Businesses in the region continue to expect growth over the next six months, with expectations more widespread this month.

Weekly jobless claims fell by -12,000 to 219,000 from a revised 231,000 the previous week, the Labor Department announced on Thursday... evidence that the labor market remains robust.

A small downside to the 'Goldilocks' scenario validated by Wall Street: the index of leading indicators, which is supposed to foreshadow the evolution of the US economy in the months to come, fell slightly for the sixth consecutive month in August, announced the Conference Board on Thursday, which sees this as a sign of a slowdown in activity.
The leading index fell by 0.2% last month, to 100.2, following a 0.6% decline in July, according to a confirmed figure.

A mediocre session for bonds in Europe (largely offset by spectacular gains on the CAC and E-Stoxx50, in the wake of the DAX40 beating an all-time high of 19,000pts.
Bunds fell by +0.7Pt to 2.2000%, our OATs by +1.8Pt to 2.932%, while Italian BTPs erased -2Pts to 3.5500% with the promise of a return of the deficit to below 3% in 2027.

The Bundesbank expects a further contraction in growth in the 3rd quarter of 2024 (the recessionary climate is set to last).... and it's hard to see how things will pick up again in Q4, unless there's a massive stimulus package in China.
Growth in Europe could also disappoint in Q3: sales of electric vehicles collapsed by -44% in Europe over 1 year in August (4th consecutive month of decline) and by -70% in Germany, with just 27,000 units sold... hence the planned closure of 2 plants of the (multi-brand) Volkswagen group.


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