The German State obligation 2 years thus rose from 2

The year 2006 has been synonymous with tensions on the bond market, either in the United States or in Europe merits of hardening of monetary policies of major central banks. Sometimes even beyond expectations. The US Federal Reserve, which started its cycle of rising interest rates as early as the month of June 2004, has been the objective of the federal funding up to 5.25, June 29, under the direction of its new President, Ben Bernanke. Before a pause, the US economy showing signs of weakness.

This logically led an evolution in two parts on the market: the first half saw a tension of the order of 85 basis points on the rate to 2 years and 10 American years, up to 5.25. However, concerns about the real estate sector and growth led to a relaxation of 46 to 54 points on the second part of the year. In the end, 2006 has been synonymous with a rise of 40 basis points of the U.S. to 4.80 2 years and 30 points to 4.70 for the 10 years.

On this side of the Atlantic, the movement has been both more pronounced and less choppy. The German State obligation 2 years thus rose from 2.86-3.89 in 12 months (i.e. voltage of 103 basis points) and 10-year Bund rose by 63 points to 3.94 (after a high point in July to 4.15). Here again, the European Central Bank (ECB), which has opted for the path of the tightening in December 2005, went further than that did the strategists and economists. After six bearings, the refinancing rate was set at 3.50 on 7 December, while that the European economy has surprised by his force. On the Bank of the Japan, if it put an end to more than five years of zero interest rate policy last July, it has been since then, because statistics sawtooth.

Very contrasting scenarios

Today, all eyes turned to the United States. Assist, in 2007, a soft landing or a hard landing of the US economy The magnitude of the slowdown in the United States will depend on the evolution of us monetary policy. However, economists and strategists have very different diagnoses on the State of health of the world, explaining a high dispersion of the forecasts on the rates in 10 years end of the year (see table), 3.80 to 5.40.

The most pessimistic expect a downturn in the US economy, believing that the real estate crisis will extend to all sectors and reducing the consumption of households. Such a situation will the Fed sharply cut interest rates. What would cause a decline in the dollar and a new relaxation of long rates. BNP Paribas teams believe that the Fed could cut rates to 3 in 2007 and see the US 10 years to 3.8.

The most optimistic, which include Barclays Capital economists, believe, on the contrary, that the United States are not so bad. The real estate downturn have already reached its peak. Published Tuesday, the figures for sales of new homes for November (an increase of 3.4) seemed to move in this direction. On the other hand faced risks of inflation, the Fed could extend its cycle of rate hikes and bring the goal of federal funds to 6, according to Barclays Capital.

Beyond these two extreme positions, the majority of operators expect to slow moderate in the United States next year, which would only require two or three decreases of rates in the second quarter. This scenario supports a new relaxation of long rates in 2007.

Forecasts are less contrasting concerning Europe, where growth remains vigorous, but may be affected by the US slowdown and the rise of the German VAT in January. Players bet, generally, on a new higher rates of the ECB in March 2007, or even a second gesture later in the year. With economists, rates to 10 years are still considered in broad range, end of the year, ranging from 3.35 to 4.60.