Potentially threaten the financial markets

The publication of weekly applications of lower unemployment benefits that planned in the United States and increased prices more important than expected January import were comforted Tuesday for rates upward trend.

The performance of the loan of American State for 10 years climbed up to 5 basis points, to 4.20 (one above since January 31), stabilizing 4,174, while that of the 2-year loan from 3,36 to 3,391.

Auditioned before the House of representatives Banking Committee, the President of the Federal Reserve reiterated yesterday exactly the speech on the eve before the Senate. A speech addressed in priority to the community of investors bond whose behaviour is "aberrant", according to the Fed, which considers "enigmatic" long rates as low level.

For Bill Gross, Manager features of Pimco (one of the largest pension funds active in the bond market), "the goal of Alan Greenspan is lowering the price of State bonds in the long term and, to some extent, also lower than borrowing in the medium term." "He calls it a puzzle but it must especially be inferred that there clearly more desire to see the rates continue to decline. The concern about the downward evolution of long yields is noticeable on both sides of the Atlantic.

Prevent rather than cure

In an interview with the daily "Il Sole 24 Ore", one of the members of the Council of the ECB, Tommaso Padoa-Schioppa, indicated that "exceptionally low levels of interest rates have pushed investors into a specific category of assets and caused strong price increases in some areas, especially in the estate of a few countries". Potentially threaten the financial markets. In a recent study, Patrick Artus, Chief Economist of Ixis CIB, recalled the dangers that run the maintenance of too low interest rates. The economy is likely to fund unprofitable projects: investors tend to refer to the detention of liquid assets to compensate for low performance of saving and Governments have less pressure to reduce their public deficits, which they easily re-finance at a lower cost.

Not to mention the damage that may occur to a brutal and not advance the interest rate rise. According to Patrick Artus, "the problem is that of the rationality of expectations: If all economic agents anticipate that the period of low interest rates is transitional and that a rise in long rates will take place, there is no concern."

Conversely, the danger arises when economic agents "did not form this anticipation", taking the risk of being completely taken on its head. Maybe is it the deep meaning of the message to Alan Greenspan, who prefers prevention rather than cure. Because prevents Pascal Blanqué, Chief Economist of Credit Agricole, "there is no resorption of U.S. and global imbalances without real, short and long interest rates increase. This movement "may be even more brutal that he will have been deferred". In these conditions, the preferable option, according to the Economist, is that the Fed itself take the initiative "anchoring in the rest of the world of positive expectations on the US economy" to prevent this "creditors of the United States who put themselves on strike by saturation of their absorption capacity of the dollar". This extreme situation would require the United States to increase the compensation offered by the investments in their countries, which implies an increase in long interest rates and a decline in the dollar.

For the moment, this escalation of tension only a step much benefited to the greenback. Pointed to 1,3020 dollar at the opening, the euro is exchanged in the evening against 1,3073 dollar. It is the highest level reached by the single currency since January 26. The US currency was indeed affected by the escalation of tension between the US and the Syria on a background of latent crisis with the Iran. It was 1,1836 Swiss francs for 1 dollar last night, against 1.21 Swiss franc still five days ago.