Geopolitical tensions in the Middle East are impacting the CAC40, with oil prices rising by almost 18% in a week, despite a recent small correction. Natural gas prices in Europe have also increased by around 20% in the past three weeks, contributing to market volatility.

In France, the political situation is uncertain, particularly regarding budgetary matters, as the OAT-Bund spread remains at approximately 80 basis points. Despite recent comments from Michel Barnier, the spread has not narrowed, indicating market vigilance rather than panic. Ongoing negotiations among different political factions and the need to present a strong proposal to Brussels are causing concern among investors.

In the U.S., the 10-year Treasury yield has risen sharply, surpassing 4% for the first time since early August. This increase is driven by concerns about inflation, as highlighted by Thomas Barkin of the Richmond Fed. The SP500 has experienced a significant increase in volatility, likely influenced by hedging activities ahead of the upcoming corporate earnings season and the U.S. elections scheduled for next month.