Nearly 90% of the gains made at the start of the week (the most bullish phase since mid-December) were wiped out in a matter of minutes following the publication of the NFP (+353,000 new jobs, twice as many as forecast)... and losses widened even further in the late afternoon for T-Bonds (+20 basis points) with the publication of 'household confidence' (at its zenith).

Yes, it's a real blow to bonds, with job creation in the USA thwarting all forecasts, not to mention a sharp upward revision of December's figures (+117,000 to 333,000).
US yields exploded across the curve: the '30 yr' rose from 4.103% to 4.243% and the '2 yr' surged +20pts to 4.394%.

Over the past week, the '10 yr' initially contracted from 4.138% to 3.84%, before falling back to 4.05% in 24 hours.

January's NFP and the 0.6% rise in wage costs (twice as high as expected) are pushing back the soft landing scenario evoked this week by the Federal Reserve.

And that's not all: US consumer sentiment rose sharply in January to 79, reaching its highest level since July 2021, according to the final figures of the University of Michigan survey published on Friday (versus 69.7 in December).

This month-on-month increase of over 13% has only been surpassed five times since 1978, says Joanne Hsu, the report's author, who points to an improvement in confidence not only linked to consumers' personal financial situation, but also to the economic situation in general.
The current conditions component rose to 81.9 from 73.3 the previous month, while that measuring expectations climbed to 77.1 from 67.4 in December.
As in the preliminary version, the one-year inflation expectation was confirmed at +2.9%, the lowest since the end of 2020.
The non-expansion of the cost of borrowing in March is becoming a certainty (85%), while a fall in May is losing supporters (the consensus is weakening towards 60%).

On the European statistics front, in France, manufacturing output rose between November and December (+1.2% after +0.2%) and in industry as a whole (+1.1% after +0.5%), according to Insee's seasonally and working-day adjusted data.
Our OATs have rallied from 2.66% to 2.742% (+2pts in 24H, but a big gap compared with the morning), Bunds from 2.136% this morning to 2.2400% (and +1pt in 24H).... and Italian BTPs stand out from the pack: they are off by +8Pts from 3.726% to 3.8050%.
Same gap on British 'Gilts', which are down to 3.955%: they are regaining their gains from Monday to Thursday, and the week ends with an insignificant -2Pt gap.


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