The US economy continues to perform well, and for the first time in months, the manufacturing activity index had the luxury of coming in above expectations at 48.4. Below 50, the sector is still considered to be in contraction, but we'll have to watch for the impact of Donald Trump's measures before we can talk of an end to the crisis. Meanwhile, services continue to hold their own, even if activity is easing a little, with the index at 52.1 vs. 55.7. The long-awaited employment report was broadly in line with expectations, with 227k jobs created in November, against an estimate of 220k. The only slight downside was that wages (+4% y/y) continued to rise at a rate above the Fed's inflation target (2%). Not enough to dent investor confidence, 87% of whom believe that the Fed will opt for a further 25bp rate cut at its next policy meeting, scheduled for the 18th. In turn, the US 10-year yield continues to ease after hitting our inflection point at 4.46/55%. Successive breaches of the 20-day moving average, which now stands at 4.32% and then 4.28%, suggest a further decline towards 3.94%, or even a return to the September lows of 3.60%.

Elsewhere in the world, the spread between France and Germany has narrowed sharply over the past few days, testing its former breakout point at around 80 basis points. The German 10-year tested its September lows at 2.03%, a level it is now trying to rebound from. We can watch for initial resistance around 2.13% before considering 2.25%. On the other hand, below 2.03, there is no support before the end-2023 lows at 1.90%.