If December 2023 had been marked by a very sharp drop in rates, we have experienced the complete opposite in recent weeks. The American 10-year thus ended Friday close to the high points of the year at 4.62%! The cause, the persistent uncertainties surrounding the implementation of Donald Trump's economic program and the inflationary fears that result from it. In any case, we will have the first elements of an answer shortly because January 20, the day of his inauguration, is approaching. It should be noted, moreover, that on the subject of immigration, he already seems ready to make concessions for visas issued to qualified foreign workers, after debates between Elon Musk and Republican Party officials. In the past, this type of H-1B visa had been strongly criticized by D. Trump, who had notably restricted its obtaining, then suspended its application during his first term. In Europe, sovereign rates were also under pressure and back to mid-November highs with the German 10-year around 2.39%. Although this movement is partly linked to the dynamics of rates across the Atlantic and amplified by the low volumes at the end of the year, the rise in European gas prices towards annual highs (€47.5/MWh) did not help. On January 1, 2025, the transit contract between Russia and Ukraine will expire and Kiev does not wish to extend it, thus reviving fears of gas supplies in the European Union while stocks are now below the 2019-2023 average (at 76% vs. 79%).
On the stock market side, between profit-taking and rising rates, Wall Street, and in particular the tech giants, suffered particularly on Friday. Let's keep in mind, however, that after a very good performance in 2023, 2024 has once again been a very good year for the American market: the S&P 500 is up around 27% since the beginning of the year. Since its creation in 1957, the index has only posted gains of more than 20% two years in a row three times!
Finally, despite the Christmas truce, the political news remains busy. In Italy, G. Meloni managed to get his 3rd budget adopted since the beginning of his term, while the political uncertainty in France remains. F. Bayrou's government was unveiled on Monday evening, but the real issue will be its ability to get a finance bill adopted for 2025 in January. In Germany, visibility is also limited with the announcement of early elections on February 23. The political calendar for early 2025 is already quite full!
