OAT fell sharply due to risk appetite, decorated by BTP

Stock market indexes rise again with +2.5% on the Nasdaq (12,650), which crossed the +2,000 mark, taken from the low of 10,600 on June 16 (+19%), and +1,600 points since July 14 (+15%) without consolidation in 3 weeks).
The S&P500 4160 also posted +16% from mid-June lows and +12% over 3 weeks.

Risk appetite has returned sharply since mid-July, and interest rate markets were little affected as they hoped to see the Fed ease its monetary policy from the end of the first half of 2023.

This hope was dashed a bit by very “hawkish” inflation speeches from three Fed members in 24 hours: Charles Evans (Chicago Fed) and Mary Daly (San Francisco Fed) followed by James Bullard. (St. Louis Fed) to confirm that firm and decisive action is needed in the face of inflation in the United States.
Mary Daly believes that after peaking, rates should remain at their peak “for some time” to extinguish the last embers of inflation.

The prices of US Treasury bonds rose by +4 points to 2.781%, although the “numbers of the day” in the United States are mixed, primarily less good: the activity of the American private sector decreased in July for the first time since June 2020. , according to the S&P Global Composite PMI, which finally stood at 47.7 (revised from a previous estimate of 47.5) after 52.3 in the previous month.

A pleasant surprise is the increase in orders for American industry by +2% (according to the Commerce Department, they increased by +1.8% in May).

In Europe, yields are rising in the absence of serious statistics or declarations from the ECB: this is probably one of the consequences of the current one-sided arbitrage in favor of stocks.
Our OATs were down +5pts to 1.43%, Bunds +8.5pts to 0.886%, Italian BTPs down -3.5pts to 3.005 (spread narrower +212 with Bund vs +250 for 10 days ago).

For its part, Germany returned to a trade surplus in June, according to Destatis, at 6.4 billion euros, after a deficit of 0.8 billion the previous month.

The Federal Statistics Office explains that this return to positive territory is the result of a 4.5% increase in German exports, well above the slight increase in imports of 0.2% compared to May.
But it’s not all good news: this morning investors learned of a decline in the S&P Global composite PMI index in the Eurozone.

Activity there slowed from 52.5 in June to 51.7 in July, reflecting a third straight month of contraction in private sector growth, the weakest pace since April 2021.
The final so-called “composite” index of overall activity in the region came in at 49.9 last month, down from 52 in June, marking the first decline in activity since February 2021.

Industrial output recorded its sharpest contraction since May 2020, while activity continued to pick up in the services sector, but at the slowest pace in six months.

“Very high inflation in Europe is clearly having a negative impact on demand, as service providers and manufacturers report greater reluctance from customers to place orders,” said Joe Hayes, senior economist at S&P Global.

The trend is identical in the private sector of the eurozone, the index in question also fell markedly in July, a surge in inflation dampening the recovery in consumption expected after the lifting of restrictions. Wednesday.

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