(CercleFinance.com) – The Paris Stock Exchange had recovered 0.5% on Tuesday, it lost it again today (CAC40 down 0.57% at the close to 7,445): the scores have been frozen since midday: everything seems in reality frozen for 4 sessions.
Investors have in principle been back from vacation for 15 days but volumes are not taking off again and less than 1.2MnsE was traded.
On Wall Street, the indices seem to have been paralyzed for 3 days: gaps between +0.05 and -0.05% the day before, identical behavior this Wednesday, with the Nasdaq showing between 0.00 and 0.1%, the S&P500 falling by 0.1%.
Although the Federal Reserve will formalize the end of its restrictive monetary policy this evening by announcing a first rate cut since March 2020 (the ‘pivot’ was expected 9 months earlier), the odds remain tight as its press release approaches.
The decline in inflation and the slowdown in the US labour market argue in favour of easing, but the good resilience of growth argues rather for a limited reduction in the cost of money.
Following recent comments by several Federal Reserve officials, markets are pricing in a 63% probability of a 50-point rate cut tonight, according to CME Group’s FedWatch tool.
But the hypothesis of a smaller reduction of 25 points has not yet been completely ruled out, since it remains considered credible by 37% of the participants.
The Commerce Department reported yesterday a sharp rebound of 9.6% in U.S. housing starts in August compared to the previous month, to 1,356,000 at an annualized rate, after a 6.9% drop in July (revised from an initial estimate of -6.8%).
Today’s ‘figure’ also points to more robust activity: US housing permits – which are supposed to prefigure future construction starts – climbed 4.9% to 1,475,000 last month and housing deliveries rose 9.2% to 1,788,000.
There were also figures this morning from the Eurozone: the annual inflation rate in the Eurozone slowed from 2.6% in July to 2.2% in August, according to Eurostat, confirming its flash estimate for last month, while that of the European Union also fell by 0.4 percentage points to 2.4%.
On the bond front, the prospect of a rate cut on both sides of the Atlantic seems ‘in the cards’: the yield on ‘2034’ T-Bonds is up +5 points at 3.6940%, the ‘2-year’ is up +6.1 points at 3.6530%.
In Europe, the ten-year German Bund is up +4.5 basis points to 2.1900% while our OATs are up 5.6 more to 2.9160%, the Italian BTPs are up +7 to 3.5750%. Finally, the Spanish Bonos, with +6 points, are back at the 3.000% threshold.
If the fall in the greenback had favoured the price of black gold, Brent and American light crude are falling again by around 0.3% to around $73.3 for Brent and $70.7 (barrel of WTI) respectively.
The Euro gained 0.05% towards 1.1120, which erases the decline of the previous day. Finally, the ounce of Gold remains frozen at around $2570, 0.4% from its absolute record.
