Wall Street had a hard time digesting the (too) good ISM services figures, and the resulting surge in interest rates. T-Bond yields reached, then exceeded, their end-April 2024 highs, with the 30-year now posting over 4.90%, i.e. almost four times the yield on S&P500 equities (1.25%): this is the most spectacular yield gap in 23 years... and has always resulted in major corrections over the past 100 years.

On Tuesday, the Dow Jones dropped just -0.4%, but the losses were heavier for the S&P500 (-1.1%) and the Nasdaq fell -1.9% in the wake of Nvidia (-6.2%), which reversed course after smashing a new all-time record the previous day and pulling the entire tech sector upwards.

Other notable declines included Tesla (-4%), following an investigation into security flaws in autonomous driving, Broadcom (-3.3%) and Meta (-2%), as Mark Zuckerberg announced the end of "fact checking".

During a speech in which he explained his position, his description of 'fact checking' at Meta was more akin to a form of censorship and promotion of certain official truths - he evoked a 'strong political bias'- at the request of the Biden administration. Meta's boss pledges to promote 'more free speech', confirming that it was deliberately restricted - under the pretext of 'moderation'-, in violation of the 1st Amendment.

Investors may be more cautious after the publication of "vigorous" business figures, while Wall Street will be closed on January 9 (a day of commemoration in honor of Jimmy Carter, who died at the age of 100).

This session will remain marked by a surge in long rates: +8 basis points on the '10 yr' to 4.696%, +7.5 bps on the '30 yr' to 4.914%. Yields soared at 4.00 pm, following the publication of the ISM services index, which rose to 54.1 from 52.1 the previous month, while economists were expecting an average figure of 53.5.

An hour and a half earlier, investors had learned of the US trade deficit: it rose by 6.2% to $78.2 billion in November, with imports of goods and services increasing more than exports.

Tonight, investors in US treasuries don't seem to be expecting any rate cuts from the Fed before July (just before the summer break and the Jackson Hole meeting).

Copyright (c) 2025 CercleFinance.com. All rights reserved.