The markets take stock

After the strategic realignment of the United States, risky markets are being hurt by the decline in US consumer optimism. The fall in bond yields, driven by the long end of the curve, reflects these concerns about the persistence of US exceptionalism, which the new Trump administration is keen to revive. With the prospect of new defence spending, investors are beginning to prepare for a supply shock in bonds. For the time being, the dollar seems to be the last to buy into this, rising against all currencies and gold. Next week, key indicators will provide a clearer picture, notably job creation and the ISM indices.