With 24 hours to go before the FED's final statement, sentiment among traders seems to have darkened once again.
Yields on both sides of the Atlantic had eased by -4 to -5 pts the previous day, but this was not to be, and the heaviness of the situation took hold from the very first exchanges on Tuesday 30th.

Not only were the previous day's gains wiped out by the end of the morning (12:30), but yields were back to last Friday's worst levels (shortly after 2:30).
In the U.S., T-Bonds rallied by +6pts to 4.673% (i.e. +90pts since 12/27/2024), the '2-yr' by around +5pts to 5.02%, the '30-yr' by +4pts to 4.7800%.

Although the day promised to be rich in economic statistics, the latest one published in the U.S. did little to lighten the mood, although it did help to substantiate the thesis of an imminent slowdown in the U.S. economy.
The Conference Board's consumer confidence index deteriorated sharply (-6.1pts) for the 3rd consecutive month in April, to 97 this month from a revised 103.1 in March: its lowest level since July 2022.

The sub-index measuring consumer expectations fell to 66.4 after 74 last month, a figure below the 80-point threshold often being a harbinger of a coming recession.

There was also a flurry of figures in Europe (this morning), starting with inflation in the eurozone: it is estimated at 2.4% in April 2024, stable therefore compared with its March level, according to a flash estimate from Eurostat, the European Union's statistical office.

CVS' GDP rose by 0.3% in the eurozone and the EU, compared with the previous quarter, again according to Eurostat.
Investors also took note of France's GDP, which grew moderately in the first quarter of 2024 (+0.2% after +0.1% in the previous quarter), according to Insee's first estimate (in CVS data), while inflation slowed to +2.2%.

In Germany, GDP grew by 0.2% in Q1 2024 in sequential terms, in volume and CVS-CJO data, according to a first estimate from Destatis, following a 0.5% decline in Q4 2023.

Our bond markets had no particular reason to react badly, but all the previous day's gains were regained: our OATs stretched by +5.6pts to 3.0800%), Bunds by +7pts to 2.594%), Italian BTPs retrenched by 6pts to 3.88%.

All attention seems focused on the uncertainties surrounding the tone of the Fed's statement to be released tomorrow evening.

No rate changes are expected on this occasion, but those involved will be dissecting the language relating to inflation: this was almost unthinkable 3 months ago, but the hypothesis of zero rate cuts in 2024 and one hike in January 2025 (9 months from now) now garners 33% of votes, while a 1st rate cut in September is marginally in the majority.
Recent weeks have been clearly marked by a spectacular downward revision of US rate cut expectations for 2024, from seven to potentially zero.

For completeness, Gilts have deteriorated by +5.3 basis points to 4.4050%, which brings them close to the worst levels seen since November 2, 2023 (at opening).

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