# PORTFOLIO CHARACTERISTICS
rates by 25 bp and 50 bp respectively. During the month, the solidity of macroeconomic publications in the United States strengthened the assumption of a soft (or no) landing. The US Composite PMI rebounded sharply in February, from 46.8 to 50.2 (vs. 47.5 expected), driven by an improvement in the services sector (50.2). At the same time, retail sales rebounded 3% month- on-month in January (vs. 1.8% expected) while the US economy created 517 k new jobs (vs. 185 k expected). Annual headline inflation surprised on the upside (6.4% vs. 6.2% expected) and the PCE index stood at 5.4% (vs. 5% expected), ruling out the prospect of linear disinflation. These circumstances forced investors to revise their expectations in terms of the trajectory of the Fed’s key rates. Thus, the markets now see a terminal rate of 5.4% in July 2023 vs. 4.8% a month ago, and have revised the anticipated date of the first rate cuts to 2024. The US 2-year and 10-year yields increased by 61 bp and 41 bp, respectively, reversing the US yield curve (-90 bp). In Europe, too, economic figures continued to highlight the resilience of the European economy, while the European Commission revised its growth forecast for 2023 upwards to +0.8% (vs. 0.3% in the autumn). The PMI Composite index in the eurozone confirmed its anchoring in the expansion zone (52.3 vs. 50.6 expected), also driven by the services sector, while manufacturing activity remained in contraction territory. On the price front, inflation in the eurozone dropped from 9.2% to 8.6%, thanks in part to base effects on energy prices, but core inflation nevertheless remains high (+5.3% year-on-year). Against this backdrop, the fixed income markets now see the ECB’s terminal rate reaching 3.9% at the end of 2023 vs. 3.4% a month ago. The entire eurozone yield curve was revalued upwards: the German 2-year gained 37 bp and the 10- year rose 49 bp to 2.7%.
Credit markets continue to draw investors who have been attracted by 10-year interest rates in the eurozone (investment grade debt). Risk premiums remain moderate, benefiting from low volatility on risky assets and the very contained level of specific risk.

Translation (ENFR, 2023-02-28):
# CARACTÉRISTIQUES DU PORTEFEUILLE
renforce l’hypothèse d’un « soft » voire « no landing ». L’inflation surprend à la hausse (6.4% contre 6.2% attendu) et l’indice PCE à 5.4% (5% attendu) écarte l’idée d’une désinflation linéaire. Les marchés voient un taux terminal à 5.4% en juillet 23 (vs 4.8% il y a 1 mois) et ont reculé la date anticipée des premières baisses de taux à 2024. Les taux 2 et 10 ans US ont augmenté de 61 et 41 pb, inversant un peu plus encore la courbe des taux (-90 pb). En Europe, les chiffres économiques continuent de mettre en lumière la résilience de l’économie, alors que le Commission Européenne revoit à la hausse sa prévision de croissance pour 2023 à +0.8% (vs 0.3% à l’automne). L’indice PMI Composite de la Zone Euro a confirmé son ancrage en zone d’expansion (52.3 vs 50.6 attendu). L’inflation a baissé de 9.2% à 8.6%. Dans ce contexte, les marchés de taux voient désormais le taux terminal de la BCE atteindre 3.9% fin 2023 (vs 3.4%). L’ensemble de la courbe de taux en zone euro a été réévaluée à la hausse : le 2 ans allemand gagne 37 pb et le 10 ans grimpe de 49 pb pour atteindre 2.7%. Les marchés de crédit attirent toujours des investisseurs attirés par de niveaux de taux inconnus depuis 10 ans en zone euro (dette investment grade). Les primes de risque restent modérées, bénéficiant de la faible volatilité sur les actifs risqués et du niveau de risque spécifique très contenu.