Yields had been declining for several days, and this easing trend was confirmed by bond markets euphoric after the ECB's announcement in Frankfurt on Thursday.
The ECB maintained its deposit rate at 4%, as expected, but reduced its inflation projections for the eurozone to 2.3% in 2024, then 2% in 2025 and 1.9% in 2026 (which is excellent news, as price rises are expected to be back on track as early as next year).

Excluding energy and food products ('core inflation'), its underlying inflation assumptions have also been revised downwards, to an average of 2.6% for 2024, then 2.1% and 2% respectively for the following two years.

As a result, our OATs have eased by -3Pts to 2.753%, Bunds by -2.5Pts to 2.3200%, Italian BTPs by -3.5Pts to 3.6270%.

According to the teams at Muzinich, an asset management company specializing in credit, the overnight interest-rate swap market estimates that there is an 86% probability that the ECB will cut rates by 25 basis points in June.
This means that a rate cut is possible as soon as the FED has done so, probably as early as mid-June.
The ECB has also lowered its growth projection for 2024, to 0.6%... not to mention the -11.3% drop in orders to German industry in January, as electric vehicle orders collapsed in mid-December following the abrupt abolition of the purchase incentive.

The Eurozone economy is then expected to recover and grow by 1.5% in 2025 and 1.6% in 2026, supported firstly by consumption, then also by investment.

There were also several US figures: the US trade deficit widened to $67.4 billion in January, compared with the previous month's $64.2 billion (which was revised from an initial estimate of $62.2 billion), according to the Commerce Department.

This 5.1% month-on-month increase in the deficit reflects a 1.1% rise in US imports of goods and services, to $324.6 billion, while exports were almost stagnant (+0.1%) at $257.2 billion.
US productivity was revised to 'unchanged' at 3.2%, and weekly jobless claims were also virtually unchanged last week.
T-Bonds ended the day little changed - but slightly down - with +1.3Pts at 4.115%, while Wall Street remained 'full risk on', with the S&P500 setting a new intraday record above 5.130Pts.

A rise which perhaps reflects a degree of caution 24 hours ahead of the release of the NFP, with the risk of job creation remaining above 250,000 (Wall Street expects 190,000).


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