Rates continue to rise

The US 10-yTreasury yield is settling above 1.9%, while European long rates continue to rise after last week’s BoE and ECB meetings. Markets are now expecting more than 5 rate hikes from the Fed this year after a much better than expected US job report: more than 400k jobs created in January and wages accelerating to +5.7% yoy (more details here).

On the ECB side, the Dutch governor thinks that Eurozone inflation could stay above 4% for most of the year. We think so too: “Barring a crash in energy prices, the inflation rate may end the year closer to 4% than 2%” is one of the conclusions of the report we published on Friday on the subject. Klaus Knot therefore believes that the ECB could raise its key interest rate as early as October.

Unsurprisingly, China’s Caixin services PMI fell to 51.4 in January and German industrial production declined in December (-0.3%). No key indicators are expected today. The EUR/USD exchange rate is down very slightly to 1.143.