American bonds hit 4.10% pending Powell’s message

American bonds hit 4.10% pending Powell's message

The turning point that will be in global income at the end of October is moving away. Then, the 10-year American bond surpassed the psychological barrier of 5%. This week, it has already crossed the 4.1% required profit, which means a profit for those who are right and have bought in the last month and a half.

Although in the last two sessions of the week there were sales that cut the weekly price increase, the trend remains clear as the market buys more or less clearly than the rate of decline of the year The future is faster than expected. . Indeed, the Fed, which will hold its last meeting of the year this week, where no changes are expected, may seek to convey a message that will reverse the dovish flight, which has already discounted four 25-point rate cuts in 2024. Before that, the inflation data for the month of November in the US will be known, and the market’s reaction will depend on it.

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On this side of the Atlantic, the trend is the same, and the German bond, which reached close to 3% just a few weeks ago, has fallen below 2.2%, which is the lowest gain since April. The rebound in debt prices in Europe is explained because a strong economic deterioration like the one experienced in the eurozone will result, regardless, in a rapid reduction in interest rates. The market is already pricing in at least 125 basis points less by the end of next year.

“After the latest readings of the CPI, better than expected, the market rushed to discount even the first rate cut for March, but we think that the next data, which is less surprising, can cause a price change. trend,” they explained from AXA IM. “The question is whether the prices of services will remain moderate and the wage increase will effectively increase,” they added. “However, it seems crazy to think that the European Central Bank will cut rates in the first quarter of the year, and, until that happens, the monetary policy that will condition the movements of the fixed income is what will happen in the balance,” they concluded from the manager of the French insurance company.

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