Tuesday, September 20 was once again turbulent on the financial markets, accentuating the nervousness that has prevailed for six weeks. The yield on ten-year French bonds reached 2.5%, a first since September 2013. At the beginning of August, it was only 1.3%, and at the start of the year, 0.1%; a reminder of the economic upheaval that is taking place.
The movement is global. The ten-year US bond rate is now at 3.5%, its highest since 2010. In Italy, it is over 4.1%, four times more than a year ago. Even in Germany, the European country considered the safest, we are close to 2%, a record since the beginning of 2014.
This tension on interest rates is logically reflected on the stock markets, which are all down. The S&P 500 in the United States, as well as the CAC 40 in France, have lost 9% since mid-August. Since the start of the year, the decline has exceeded 15% for both indices.
This turbulence is the consequence of the surge in inflation experienced in Europe and the United States, with a year-on-year price increase of around 9% in both regions. In an attempt to put an end to it, central banks are raising their interest rates at a rate not seen for four decades, at the risk of triggering a recession. Jerome Powell, the chairman of the US Federal Reserve (Fed), openly acknowledged this in Augustclaiming that his action will ” hurt “ to households and businesses.
Market jitters
In this context, the current week promises to be crucial, with the meetings of a large number of monetary institutions. Tuesday, that of Sweden opened the ball, surprising observers with a rise in its interest rate of one point at a time, to 1.75%. “Inflation is too high, she is alarmed from the first line of her press release. (…) Monetary policy must be tightened. »
The nervousness of the markets, however, comes mainly from the Fed, which meets on Wednesday and whose interventions reverberate around the world. After being accused for a long time of not reacting to rising prices, it has completely changed its tune six months ago. The monetary institution has already raised its interest rate by 2.25 points, in a range currently between 2.25% and 2.5%. On Wednesday, it should probably increase it by another 0.75 points. Even by a point, said Charlie McElligott, a strategist at Nomura, who thinks the markets are underestimating this possibility. We would have to go back to 1980 to find such a rate of increase in the cost of money.
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