The flight shows the integration by the markets of a new era of “higher, longer”, imposed by the American federal reserve.
A key psychological threshold has been crossed in the increase in rates that has been accelerating for several weeks. The yield of American bonds at ten years old exceeded 5 % (5.019 %), Monday morning, for the first time since 2007, before reflecting around 4.9 % in the afternoon. It was still 3.3 % at the start of this year.
This flight shows the integration by the markets of a new era of “higher, longer” rate, imposed by the American federal reserve. The boss of the central bank, Jerome Powell, judged the still “too high” inflation last week. And, if he plans not to note the Fed guiding rates (set between 5.25 % and 5.50 % since July) in November, he does not exclude doing so again in the coming months .
End of an esoteric parenthesis
Treasuries American at ten years are the benchmark for non -risky bond investments. They led to European rates in their wake. That of the German bunds curled 3 %, while that of the French OAT flirted with the 3.6 %. The increase in American rates is also motivated by the increase in amounts borrowed by the Treasury, to finance a growing deficit.
The price of bonds evolves in the opposite direction of their rates: when there are many securities offered on the market and few buyers, their price drops and their rate climbs, reflecting an increased risk premium for investors.
The crossing of the CAP of 5 % for American obligations marks a form of market normalization, after the esoteric parenthesis of inexpensive money thanks to the ultra- monetary policy
Moving from central banks since the major financial crisis of 2008. “This rate of 5 % is in line with debt stocks to refinance and we can expect the increase to continue, before undoubtedly decrease First quarter of 2024, when macroeconomic conditions will deteriorate, ”plans Christopher Dembik, strategy advisor at Pictet bank.