Investors have clearly won a battle. On several occasions, we have echoed the dissonance between market expectations on the one hand, and those of Fed members on the other. For several months now, market participants have believed that the monetary tightening has come to an end, and that the Fed will finally be able to adopt a more accommodating stance, as it has done since the great financial crisis of 2007-2009. With this in mind, and without waiting for confirmation from the central banks, stock market indices have rallied sharply.

It should also be noted that, in addition to the "dovish" rhetoric adopted by the members of the powerful US Federal Reserve's steering committee, the latest inflation figures all point in the same direction: the downturn is underway. Last Thursday, for example, deflated Core PCE came out in line with expectations at 3.5% year-on-year, versus 3.7% the previous month. Another way to convince yourself of the widespread decline in inflation is to take a step back and look at the chart below, which groups together several US price indices.


Source: Bloomberg

By extension, yields have eased significantly: the US 10-year yield is heading towards 4.10%, while the German bund, after stumbling over the 3.01% target, has just broken its 200-day moving average at 2.55%, against a backdrop of bearish mathematical indicators pointing to a decline towards 2.18%. This threshold, which we can place alongside the 4.10% on the US equivalent, will be particularly interesting to watch and will set the tone for 2024.