The caravan of central banks passes slowly and the Fed will close the convoy. The dog tries to see some semblance of coherence in the foggy landscape of European politics. But meanwhile the markets are standing still and Bitcoin is taunting them.
Central banks, rates, economic forecasts in Europe
We are soon seeing the end of the central bankers’ caravan. The central banks of the United States, Japan, the United Kingdom, Sweden, Norway, Indonesia and Thailand are all meeting this week. The BOJ, Bank of England, Norges Bank and Bank of Thailand are expected to maintain their stance, while the Riksbank is expected to cut rates. Bank Indonesia, meanwhile, is expected to raise interest rates to support the rupiah, which is near a four-month low. The spotlight will be on the Fed and in particular its projections for next year, with markets pricing in a 25 basis point cut on Wednesday. After Wednesday’s cut, markets see a 37% chance that there will be a 25 basis point cut or no cut through 2025, according to the CME’s FedWatch tool, up from about 21%. a week earlier.
Several pieces of news argue for a continuation of the rate cut by the ECB: last Friday, the Federal Bank of Germany announced an increase of 0.2% in gross domestic product next year, compared to 1.1% in its latest estimates in June. For 2026, it expects growth of 0.8%, compared to 1.4% previously. Yesterday the Banque de France lowered its GDP growth forecast for 2025 by 0.3 points on Monday evening, to 0.9%, stressing that the economic context remained subject to “double uncertainty”, on a national and international level. . The forecast for 2026 is also revised downward compared to the Banque de France’s September projections, by 0.2 points to 1.3%, which is now also its forecast for 2027.
In Switzerland, the consensus of economists from the KOF institute expects GDP growth of 1.4% this year and inflation of 1.1%. In 2025, GDP should slow to +1.3% and consumer prices to 0.6%.
So, in this context what are the markets doing?
No surprise…European stock markets closed lower on Monday, with the Stoxx Europe losing 0.14%, the German DAX falling 0.45%, the FTSE in London losing 0.46%, the French CAC falling 0. 71%. In France, the highlight is Vivendi (+41.73%) which announced on Monday its dismantling and the listing of its various entities on different stock exchanges: Canal+, its flagship asset, fell by 21.93% on the London Stock Exchange, Havas lost 1.65% in Amsterdam and Louis Hachette climbed 23.23% in Paris. In Germany, politics took over with German Chancellor Olaf Scholz losing a vote of confidence in the Bundestag on Monday, formally paving the way for early parliamentary elections in February. But, according to experts, this situation is less worrying than that which persists in France. To be continued…In Switzerland, the SMI ended up 0.06% thanks to the good performance of Lonza and Roche. On the other hand, on the Nestlé side, the news does not sparkle. Its subsidiary Nestlé Waters must consider ending the production of natural mineral water Perrier, in the south of France, due to health risks, according to a confidential report revealed by the French newspaper Le Monde and Radio France. The stock ended down 1%.
In the magnificent country of Trump everything is fine while waiting for the Fed. The Nasdaq index (+1.24%) broke a new record and the broader S&P 500 index gained 0.38%, while the Dow Jones lost 0.25%. The Nasdaq, with a strong technological component, was notably driven by certain big names in the sector, including Broadcom (+11.21%). The group continued to be supported on Monday by its good results and by the statements of its managing director, Hock Tan, who sees a “massive opportunity” for his company in the development of artificial intelligence. Other giants of the sector finished in the green, like Micron (+5.60%), Marvell Technology (+3.32%) and Intel (+2.40%), and certain mega-caps technology companies were also able to benefit from this movement, such as Alphabet (+3.54%), Apple (+1.17%) or Tesla (+6.14%). And, thanks to Bitcoin which reached $107,000, the cryptocurrency sector gained ground, including Coinbase (+1.52%), Robinhood (+7.46%) and Riot Platforms (+8.01%) .
The bond sector has rather stagnated. The downgrading of France’s rating by Moody’s is a virtual non-event for the markets, with an infinitesimal variation in the ‘spread’ with the Bund. The worst performance of the day goes to British Gilts with +8 points of yield and a return to the ‘crisis zone’ at 4.494% (very close to 4.50%). In the United States, the yield on 10-year American government bonds remained stable at 4.40%, as it closed on Friday. A calm interest rate sector means a calm foreign exchange market. parities largely stagnated this Monday (the ‘$-Index’ abandoned the 0.1% gained on Friday, at 106.90), notably the Euro-Dollar with only -0.05% for the single currency at 1.0515 , despite the downgrading of France’s rating by Moody’s.
Precious metals were as brisk as a snail going to bury a dead leaf while base metals all fell, which is no surprise given the growth forecasts of various economies. Copper is an exception by “progressing” by 0.09%. Oil is depressed: a barrel of WTI fell 0.81% to $70.71, and that of Brent from the North Sea lost 0.78% to $73.91.
This morning
In the stock markets, the Australian market was up 0.75%, Japan’s Nikkei was up 0.26% and Taiwan’s tech-heavy stocks were up 0.5%. MSCI’s broadest index of Asia-Pacific stocks, excluding Japan, rose 0.18%. The index is expected to rise 10% for the year, its best annual performance since 2020. On Monday, data showed that consumption in China slowed more than expected in November, sending stocks lower . Hong Kong’s Hang Seng index fell 0.4%, while mainland Chinese stocks fell 0.13% in early trade.
Excellent day while waiting for the Fed and Thomas’ return tomorrow morning
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