The week ended on a rather serene note, as after a few morning sell-offs and then in the minutes following the release of the US Producer Price Index (PPI), buyers regained control from 3:30/15:45pm, and yields ended unchanged from Thursday.

The German 10-year is hovering around 2.500% (+3pts), while the French OAT is at 3.1540% (+2.9pts), giving an almost unchanged spread of 65 basis points.
Italian BTPs are holding up better, with only +1.1pts to 3.80%, while Spanish 'Bonos' are up +2pts to 3.2500%.
Overall, it's a second positive week for Eurozone Treasuries, with the spread easing by -5 to -6pts.
This morning, our OATs returned to their June 7 levels: all the scoriae of the political dissolution sequence have been erased.

In the U.S., the status quo on interest rates was the order of the day (+1Pt to 4.196/4.2020%), despite a PPI that was not in line with expectations: producer prices rebounded, largely offsetting the -0.1% sequential decline in consumer prices (CPI down to 3.00%, and +3.4% on a core basis).

The 'PPI' is up by +0.2% overall (not a good surprise) and +0.4% in 'core' data (excluding food + energy).
This was fairly predictable, given the rise in oil prices over the past month, not to mention freight costs with the Suez Canal still neutralized.

The consensus for a rate cut in mid-September jumped on Thursday from 75 to 90%: we would really need a series of very "robust" growth figures to call into question the 2 X -25Pts scenario by the end of 2024 (a far cry from the -6 or -7 X 25Pts of the beginning of the year).

Across the Channel, Gilts finished against the grain of T-Bonds, down from +4 to +4.5Pts to 4.1600%



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