Now is not the time to take risks. While tomorrow will be published at UNITED STATES the latest inflation figures for the United States, those for July, the Cac 40 is expected to drop slightly. Futures contracts on the Parisian index point to an opening down slightly by 11 points (-0.2%). Yesterday, on Wall Street, the S&P 500 closed on a stable note (-0.12%) after, however, having gained up to 1% in session.
On both sides of the Atlantic, the equity markets rebounded around 10% in one month in the hope, in particular, of a pivot in the monetary policy of the Fed, early next year. Not only had investors become convinced – at least that was the case until the release of a jobs report on Friday too strong for their taste – that the American central bank was close to stopping raising interest rates, but, in addition, they were anticipating rate cuts next year, during the first six months, both, in their minds, in view of activity statistics, the Federal Reserve had done most of the work in the fight against economic overheating and inflation.
How about a 100 basis point hike?
The consumer price index which will be published tomorrow, at the beginning of the afternoon, for the month of July, will influence the behavior of the Fed in its degree of aggressiveness in raising the Fed Funds in September. Since Friday, and the announcement of the creation of more than 500,000 jobs in July in the United States, more than in other months, investors have readjusted their expectations and are once again counting on an increase of 75 basis points (against + 50 basis points just before the publication of the statistic). Citi economists are not ruling out a 100 basis point hike, which would take the Fed’s main policy rate to a range of 3.25-3.5%, while it was still at 0% in march.
“The next 30 hours may be the calm before the storm”, writes this morning, Jim Reid, strategist at Deutsche Bank. And he reminds us that yesterday, however, “there was good news” on the inflation front, look at the results of the New York Fed’s survey of consumer price expectations. ” Their inflation expectations were down at the one-year, three-year and five-year horizons. That’s sweet music to the Fed’s ears, because if this trend continues, it means the Fed might not have to be as aggressive in raising rates, because one of its big fears is that expectations Higher inflation rates lead to a self-fulfilling prophecy of higher real inflation, as firms adjust prices and workers negotiate wages accordingly. »
The consumer price index will be released tomorrow at 2:30 p.m. In the meantime, while prices for oil continue their rebound started on Friday, TotalEnergies could, even today, be on the side of the support of the Cac 40. Beyond the fact that the employment figures published at the end of last week warded off fears of recession in the United States, triggering a rebound in raw first, the deadlock in negotiations between the United States and Iran on nuclear power is also likely to support prices.