This morning's Israeli drone strikes on Iranian soil (near Isfahan) gave the markets a fright: everyone remembered Teheran's threats of massive retaliation last Sunday... but nothing happened... and serenity returned as the hours went by.

The 'risk-off' of the early hours dissipated, the easing in rates stalled and the afternoon ended with renewed tension in the US bond market (which no longer acts as a safe haven on the eve of the weekend, proof that investors are anticipating a 'calm' weekend on the geopolitical front).
Yields on US Treasuries, which had fallen back this morning (to 4.500% at around 4.30 a.m.), are back on the rise, with the 10-year rising to 4.63%, close to 4.65%, its highest level since November, while the 2-year continues to flirt with 5.00% (at 4.9750%).

In Europe, our OATs (+1.5pts) ended the week at their worst level since the end of November, at 3.0180% (3.0300% around 4.15pm, i.e. +15pts over the week), while German Bunds ended the week +1.5pts higher at 2.5050%, while Italian BTPs ended the week +4pts higher at 3.9060% (i.e. +18pts over the week).
Across the Channel, Gilts saw a marked improvement in the late afternoon, with yields falling from 4.3300% around 4pm to 4.28% (i.e. -2.5Pts and +15Pts over the week).
No macro figures to liven up the session this Friday, but the beginning of next week will be very busy with US stats (production, inflation).

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