Investors’ risk aversion decreased from the first months of September. However, escalating tensions in the Middle East following the Iranian attack on Israel caused global sovereign debt yields to rise and bond prices to fall. THE US ten-year securities reach 4% again while September inflation is proposed as the only data of the week likely to curb the rise in yields.
The fall in the price of American bonds (they move inversely to the yield observed on the secondary debt market) leaves losses of 3.1% for the investor since September 16when purchases brought the profitability of these securities to 3.61%: the lowest of the year. But the United States’ warning of Iranian intervention in the Middle East conflict, which marks a year of reactivation of the war, materialized in a coordinated Iranian attack with ballistic missiles. And this rise in tension further raised the sovereign debt curve from all Western countries because it is assumed that Israel will retaliate. “Among its potential targets are Iranian oil infrastructure and military bases that could curb the trend toward moderation of inflation,” comment Renta 4.
However, the last point came from American information. The ten-year US bond rises to 3.99% the strength of American employment which was released at the end of last week and which exceeded the expectations of average analysis firms which were counting on an increase of 150,000 non-farm jobs and ultimately exceeded 254,000. The consequence was to place the yield on American sovereign debt for a decade at levels not seen since the beginning of August. Investors’ risk aversion is stronger in the short term. The one-year bond climbs to 4.25% while the three-month debt exceeds 4.65%.
It is now the turn of the price increase for the month of September in the United States. A priori, Annual growth of 2.3% is expectedaccording to Bloomberg, compared to 2.5% the previous month. If this inflation figure is confirmed, it would mean seeing the lowest level since March 2021: a date before the rapid increase in previous inflation rates which motivated the US Federal Reserve to quickly increase interest rates to avoid a lack of control over prices and inflation. derailment of the economy.
On the other hand, there is the underlying CPI (which updates, among other things, the price of energy) which remains frozen at 3.2% and which could force the American Federal Reserve to moderate its next rate cuts. interest and dash market expectations. that they discount another 50 basis points for the rest of 2024. In fact, the market consensus set by Bloomberg expects the September underlying data to remain at 3.2% for another month.
A priori, we do not expect a surprise in the inflation data like the latest employment data in the United States, so the debt market would not find any incentive there. bond prices continue to fall (or yields rise). The price of oil started to rise late last monthits effect may therefore not increase the CPI for the month of September. But an escalation in geopolitical tensions and the withdrawal of Iranian crude oil from the market could cause a new surge in inflation globally and force central banks to suspend their monetary easing plans.
The profitability of European sovereign debt has evolved in the same direction as that of the United States in recent weeks, even if recent increases its profitability by 40 basis points since September 16 when the average European debt is around 20 basis points. Along with the change in rating from rating agencies in countries like France, where S&P lowered its rating to AA-, sovereign bonds in Europe are also being swept up in the selling.
Beyond British debt, where the largest increases in yields occur on ten-year benchmarks, the pack reached 2.24% while the Spanish bond of the same maturity is close to 3% and the French bond exceeds it.
