Market Overview – November 2024

Long rates that surprise on the rise · 8 November 2024

In October, the main surprise came from interest rates. Not short-term key rates set by central banks which, with the exception of a few emerging countries and Japan, are pointing low; but long rates set by investors on the bond market.This month, these rates took a significant turn, rising in the United States and Europe to levels close to those observed last spring. In the United States, the 10-year bond rate reached 4.3%, a peak in three months. The upward movement in U.S. Treasury yields is primarily due to expectations that the Federal Reserve may take a more cautious approach to cutting interest rates. The strength of the latest economic indicators has made this scenario even more likely. The Fed could therefore moderate the pace of its reductions, favoring small reductions gradually. The prospect of solid growth in the United States and the cautious attitude of the Fed confirm the idea of maintaining rates at relatively high levels. Added to this, the presidential election will have a significant impact on returns. Candidate Donald Trump gained ground in polls during the month, fueling market chatter about the impact of his inflationary policies combining high tariffs with lower taxes, both of which would likely lead to increased spending and , potentially, new deficits.

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