Jerome Powell may have performed his balancing act, but a more dovish tone than expected inflamed the market and weighed on bond yields. While a pause was widely expected, the little phrase that set the fire alight was that the number of Fed members believing that a further rate hike is necessary had fallen compared to the last dot-plot in September. This was all it took to significantly reduce the likelihood of another rate hike in December.

At the same time, the labor market is showing the first signs of a slowdown, as evidenced by the ADP and JOLTS indicators. The release of non-farm payrolls confirms these positive graces, and adds to the notion that the Fed has completed its monetary tightening cycle.

Against this backdrop, it is worth noting the resilience of the US economy, against a backdrop of generally satisfactory quarterly figures, fueling the thesis of a soft landing.

On the other side of the world, the Bank of England also kept rates unchanged, allowing the Gilt to recover slightly. The configuration of the UK 10-year is particularly interesting to watch, as for several months we have been observing a distribution phase below 4.75%. However, we will need to break below 4.15%, a level which also corresponds to the 200-day moving average, to confirm a trend reversal.

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Source: Bloomberg

As for the US 10-year, the ongoing pullback below 5% has just broken through the 4.60% level. This first level is an encouraging sign that the upward momentum underway since last summer is coming to an end, with 4.10% in sight.