Investors increasingly skeptical about French government bonds

Current market commentary

The divergence between Europe and the US has increased further. The S&P 500, for example, has risen by more than 30% since the beginning of the year, while the Euro Stoxx 50 has gained 5%. Against the US dollar, the euro lost 7% at its peak, in line with the widening interest rate differential between the US and Europe. But there are also strong divergences within the eurozone. While the DAX was able to gain more than 15% thanks to its heavyweights in the insurance and technology sectors, the French leading index CAC 40 has been in the red since the beginning of the year (due, among other things, to the luxury goods companies). Ironically, France has one of the few carmakers in Europe that has performed positively this year: Renault. Political instability and the budget disputes have also led to a massive widening of the spread between French and German government bonds. The yields on 10-year French government bonds are now at the same level as Greek government bonds for the first time.

Short-term outlook

This week, the Ministerial Monitoring Committee (JMMC) of OPEC+, which has been postponed to December 5, will take place. Next week will be dominated by global central banks. The ECB, the Bank of Canada and the Reserve Bank of Australia will hold their monthly meetings.

At the beginning of the week, the focus is on the purchasing managers' indices for the manufacturing and services sectors (Nov.) and the ADP employment figures (Nov.) from the US. On Thursday, retail sales (Oct.) from Europe will follow. On Friday, GDP (Q3) for Europe, average hourly earnings (Nov.), non-farm payrolls (Nov.) and the preliminary Michigan Consumer Sentiment Index (Dec.) from the US are on the agenda. Next week, the focus will be on the consumer price indices (Nov.) for Germany and the US.