While the optimistic speeches of central bankers had left the stock market on track to continue rising, the latest US indicators are reminding investors everywhere that nothing can be taken for granted. Last week saw the publication of two price level indicators. And it has to be said, they're not all pretty. Firstly, Core CPI came out slightly higher year-on-year at +3.8%, against an estimate of 3.7%. Admittedly, no one took this into account at the time, as indices continued to break records in the aftermath. Unfortunately, the second effect came two days later with the PPI. On an annual basis, it showed a rise of 1.60% against a forecast of 1.2%, while on a monthly basis, it came in at +0.60% against an expected +0.30%.

It's hard to turn a blind eye here, and the bond market has understood this. In the end, the US 10-yr yield held up well on its 4.07% support and enjoyed a fine rally, cancelling out almost two weeks of declines in the space of a few days. The German 10-year was not to be outdone, also recovering on its 2.25% support. All this points to a test of 4.40/43% on the TNote 10 and 2.60% on its German counterpart. However, we'll try to reassure ourselves by recalling our central scenario: "At this stage, the most likely scenario would be an intermediate rebound by holding on to these levels [3.85% editor's note] towards 4.60% before starting a new downward salvo towards 3.26% or even 2.76/67%".

However, such an easing should not be linked to fears about economic growth. At this stage, it's clearly not the current narrative that still favors AI-generated profits, but a few indicators call for caution. One example is the Empire Manufacturing index, which measures the relative level of general business conditions in New York State. In March, it continued to deteriorate, falling to -20.9 against a forecast of -7.0. We'll be keeping a close eye on Wednesday's FOMC decision and Mr. Powell's speech to try and separate the wheat from the chaff.