The week ended with divergent developments on bond markets on both sides of the Atlantic, with a decline in Euro-denominated debt and a small technical rebound in T-Bonds, after Thursday evening's air pocket.
In reality, our Bunds and OATs were merely readjusting, as the Eurozone fixed-income markets closed on Thursday before a sharp correction hit US Treasuries (between 7 and 10 p.m.).

Our OATs and Bunds tightened by +6pts to 3.3030% and 2.7185% respectively, while BTPs also posted +5pts to 4.566%.
As a result, the week was a clear loser for Bunds and OATs, which tightened by +8pts over the past week.
British Gilts fared just a little better: they added just 4pts of yield to 4.375%... and over the week, that's very similar to Bunds, with +9pts.
For the record, the Greek 10-year, which has a much worse rating than Gilts or Italian BTPs, is -45pts lower than the former and -63pts lower than the Italian 10-year.... and only 15Pts higher than Spanish bonds.

US T-Bonds, which had suffered a mini-crash on Thursday evening (+15Pts on maturities from 10 to 30 years, +10Pts on the '2-year'), recovered a tiny bit of ground (1Pt basis, which is symbolic) but not enough to escape an overall hebdo decline, with +5Pts yield at 4.623%.

T-Bonds weakened by as much as -4Pts on the release of the University of Michigan's monthly survey of household confidence, which fell for the fourth consecutive month, from 63.8 to 60.4 in November.

Joanne Hsu, the report's author, cites concerns about the consequences of higher interest rates, as well as the impact of conflicts in Gaza and Ukraine.

Households' assessment of their current situation fell to 65.7 from 70.6 last month, while the sub-index measuring their expectations dropped to 56.9 from 59.3 in September.

The market's recent surge in optimism (which peaked on Friday November 3) has not withstood the negative impact of the cautious comments made by several Fed officials over the past 48 hours.

Yesterday, investors were "showered" by Jerome Powell, who explicitly questioned the effectiveness of the measures taken to bring inflation back towards its 2% target.

In the wake of these comments, the estimated probability of the Fed tightening again in December has risen to almost 15%, compared with less than 5% a week ago, according to the CME Group's FedWatch barometer.

Christine Lagarde, in turn, said at midday that we'll have to wait 'several quarters' before considering an easing of the ECB's monetary policy.

For a little reassurance, Mr Villeroy de Galhau, Governor of the BdF, believes that 'barring an unexpected shock to inflation, ECB rate hikes are a thing of the past'.

The "highlight of the week" in the United States was the semi-failure of a $24 billion issue of 30-year Treasuries on Thursday evening, which led to a sharp rise in the yield on 10-year Treasuries (up to 4.64% from 4.49% the previous day).

Treasury Specialists (TSS) were forced to compensate for weak demand from foreign institutional investors for the '30 yr'.




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