Bond yields continue to rise inexorably, regardless of whether stock market indices are rising or falling, or whether the geopolitical climate is tense or calm.
The -1.5% fall in the CAC40 or Euro-Stoxx50 has not led to arbitrage in favor of Treasury bonds, typically risk-off investments, and the yield on the 10-year German Bund, the benchmark for the eurozone, rose by +6pts to 2.491% (2.51%, the highest since 11/28/2023), our OATs returned to 3% (+6pts to 3.008), and Italian BTPs posted +7.3pts to 3.909%.

Across the Atlantic, the yield on 10-year Treasuries climbed another +5pts to 4.68%, a peak of almost five months (and +83pts since January 1), the '30-yr' gained +3pts to 4.770% but peaked at 4.800% (4.765% tonight), the '2-yr' posted +6pts and was close to '5%' (5.0100% at its highest: all gains since November 5 have been erased).

The rise in the '30 yr' (+75Pts since January 1) seems to have severely penalized US real estate: the Commerce Department reported a 14.7% plunge in US housing starts in March compared with the previous month, to an annualized rate of 1,321,000, following a 12.7% jump in February.

U.S. building permits - which are supposed to be a precursor of future housing starts - fell by 4.3% to 1,458,000 last month.
Finally, housing completions fell by 13.5% to 1,469,000 (no "weather factor" to explain this decline).

U.S. industrial production rose again by 0.4% in March (as in February), with a 3.1% jump in automotive production (vehicles and equipment).

Also according to the Federal Reserve, which publishes these figures, the capacity utilization rate in US industry rose by 0.2 points to 78.4% in March, a level 1.2 points below its long-term average (1972-2023).

In Europe, the ZEW index, which measures investor and financial analyst sentiment in Germany, climbed from 31.7 to 42.9, reaching a level in April not seen for 2 years, suggesting that Europe's leading economy is on the way out of its rut.

The 'current conditions' component, however, improved only slightly, by 1.3 points to -79.2, whereas analysts were anticipating a more pronounced recovery, to around -76.

The ZEW attributes the rise in its confidence index to the recovery of the global economy, with half of those questioned in its survey saying they expected activity to rebound within six months.
The dollar's recent appreciation against the euro is also leading survey participants to predict a rebound in German exports in the future, explains the organization.
However, the IMF has one serious downside: it is inversely more pessimistic about German growth in 2024 (+0.2% instead of +0.5%) and 2025 (+1.3% instead of +1.6%)... and even the 0.2% it allows is still higher than the average expectations of the various economic institutes.

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