Wall Street is racking up record after record - driven by the now unique and hegemonic theme of 'AI'- and couldn't care less about the trajectory of bond yields... postulating that they are bound to ease in 2024.

So, here's a 4th consecutive record for the S&P500, which is flirting with 4,900 (already exceeding the 2024 target formulated at the start of Q4 2023) and 5 for the Nasdaq-100 (+1.3% towards 17,630).
Here it is, soaring well above 17,500 (forecast for the end of 2024), 3.5 months ago, when it stood at 14.500, a gain of +20% over 15 months, based on expectations of aggressive rate cuts.

But the yield on ten-year Treasuries is stagnating this evening at 4.145%, while the probability of a rate cut in March has fallen to 45% (market consensus), and is set to fall further in view of the strength of US private sector activity (PMI): according to S&P Global, growth accelerated in January, with the composite PMI coming in at 52.3 in flash estimates, a seven-month high, after 50.9 for the previous month.

Expansion was underpinned by service providers, while manufacturers continued to see a fall in production amid intensifying supply problems", says S&P Global.

There were also figures in Europe this morning, and they remain the antithesis of the 'US stats': the HCOB flash composite PMI index of overall activity in the eurozone came in at 47.9 in January, highlighting an eighth consecutive month of falling activity among the region's private companies.

The index did, however, recover from December 2023 (47.6), but remains a long way from the expansion level (50.1).

And things are not getting any better in France: the HCOB composite PMI index fell from 44.8 in December to 44.2 in January ('flash' estimate), posting a four-month low and underlining the sharp contraction in overall activity in the country.

Ten-year German Bund yields, the benchmark for the region, eased by -1.5Pt to 2.332% (still close to the worst levels in 6 weeks) on the eve of the ECB's eagerly awaited announcements.

Our OATs stalled at 2.842% (-0.5Pt), while Italian BTPs fared better with -3Pts to 3.894%.

On the oil markets, Brent crude stabilized at $79.80 a barrel.
This is a small worry (above $80, an acceleration towards $87 was to be feared), but tomorrow the ECB will deliver its inflation expectations, and it is eagerly awaited on growth, and its desire to preserve it when Eurozone GDP is already negative.

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