Cac 40 should opened on a slight high.
Historically, if American interest rates rose, European rates often followed. That has not been the case in recent days. American rates are going up. The benchmark rate for US 10-year government bonds even exceeded 3.10% yesterday, and yet European rates are not flinching. German rates even fell a little yesterday. The spread between American rates and German rates, known as the spread, has even reached a record level. We had not seen such a gap since the late 1980s. We used to blindly follow the American markets to invest in European markets, but it seems that we will have to review our trading patterns.
How can we explain this spread between US & Europe bonds?
Is this gap due to economic growth prospects?
Mainly. Even if many predict a slowdown in American growth, there are few growth signs visible at the moment, whereas in Europe the economic news has been rather worrying lately. Especially in Germany with the slowdown in growth in the first quarter, by 0.3% against 0.6% in the last quarter of 2017, and in the whole euro area with growth of 0.4% in the first quarter against 0.7% in the previous quarter. The 2% inflation target is moving away in Europe and the ECB’s prospects for interest rate hikes are also moving away. While the US Central Bank will continue to raise interest rates.
Yes no, maybe..
The North Korean dictator is playing the “hard to get”. He does not want the United States to put conditions on his meeting with Donald Trump in Singapore, a meeting he threatens to cancel. The United States, for their part, confirmed that they were continuing to prepare for this historic meeting.
“You guys misunderstood!” told us yesterday The League and the Movement 5 stars. There is “off course” no breakdown in negotiations but just some “adjustments”. The rumors of an agreement between the two parties in which one would like to return to pre-Maastricht rules, which would lead in particular to no longer respect the 3% deficit rule, caused a movement of concern among investors. Italian rates are back above 2%, at exactly 2.12%, a rate that remains historically low.
First consequences for Iran
Without the United States, despite European efforts, the Iranian nuclear agreement no longer holds. We’re starting to see that. With companies distancing themselves from Iran for fear of US sanctions. A striking example. Total. The group had begun a return to Iran in great pomp. Total has just announced that it will withdraw from the country if it is not guaranteed protection from American sanctions.
Marseille lost in the Europa League Finale yesterday. (Yes !!). Thank you to Antoine Griezmann. Marc Zuckerberg will meet Emmanuel Macron on May 23 in Paris. Probably to apologize. Volkswagen (the brand) will not be present at the Paris Motor Show. Apparently, no new models to present
On the agenda today
On the macroeconomic level, the current situation is likely to be slim. Essentially two U.S. statistics, the “Philly Fed” and weekly unemployment registrations, are expected in the early afternoon. The trend was not strong enough on Wall Street or in Asia last night to prejudge that of Paris. Futures contracts give a slightly higher opening for the French index.
Trade wisely – And at your own risk.