consolidation, before inflation and quarterly

(Boursier.com) — Wall Street lost a little ground before market this Wednesday, the S&P 500 losing 0.1%, the Dow Jones also 0.1% and the Nasdaq 0.2%. The trend is relatively cautious, while the American market recovered well yesterday with Nvidia and the values ​​of AI. Operators are now waiting for inflation figures, which will be revealed tomorrow. The quarterly season will begin on Friday with several major banks.

In the meantime, geopolitical uncertainty remains high, as Israeli Prime Minister Benjamin Netanyahu is scheduled to speak today with Joe Biden, while Israel prepares its response to Iran’s missile attack and Washington tries to temper this reaction.

Expectations of a rate cut have fallen since the announcement of the latest very “resilient” American employment figures. In addition, Beijing disappointed yesterday by not unveiling additional fiscal stimulus measures.

According to the CME FedWatch tool, there is now more than 86% probability that the Fed will lower its rates by a quarter of a point on November 7, at the end of the next monetary meeting, which would bring down the rate of ‘ fed funds’ between 4.5 and 4.75%, compared to 4.75 to 5% currently.

Many Fed officials are speaking out this week, as market forecasts now call for a quarter-point rate cut at the next monetary meeting, rather than a new strong gesture of half point. Yesterday, Governor Adriana Kugler indicated that she strongly supported the Fed’s decision last month to cut rates by 50 basis points to begin its easing cycle. She favors further rate cuts if inflation continues to ease. “If progress on inflation continues as I expect, I will support additional rate cuts to move towards a more neutral policy posture,” Kugler said during a speech in Germany.

She added that any decision on rates would depend on multiple and economically diverse sources. Thus, if downside risks to employment intensify, it could be appropriate to adjust policy more quickly towards a neutral posture…

John Williams, head of the New York Fed, judged that it would still be appropriate to reduce rates over time, after the sharp drop in September. In an interview published on Tuesday by the Financial Times, Williams echoed recent comments from Jerome Powell, saying that last month’s decision should not be taken as an indicative rule for future decisions. For now, Williams believes monetary policy is well positioned, with the Fed’s recent Summary of Economic Forecasts (SEP) providing a good basis for assuming the economy continues to grow and inflation returns. towards 2%. Last week, Powell indicated that the central bank would likely stick to quarter-point interest rate cuts and was in no rush following recent data…

The President of the Minneapolis Fed, Neel Kashkari, who spoke the day before last evening, judged the American economy resilient and indicated that the balance of risks was shifting from inflation to employment. However, Kashkari believes the job market is still solid for the moment, despite the risk of a potential increase in unemployment. He also specified that the Fed’s neutral rates could now be close to 3%. Real estate inflation could calm down with rent reductions.

Alberto Musalem, president of the St. Louis Fed, warned against rushing to adjust monetary policy. He therefore prefers patience when it comes to lowering rates, judging that it should not be “relaxed too quickly”. He supported the Fed’s decision to lower rates by half a point in September, but now appears to be procrastinating, preferring gradual and measured reductions.

Raphael Bostic, president of the Atlanta Fed, judged yesterday that there was a risk… that the American economy was too strong and that this would hinder the readjustment of monetary policy. Bostic estimated that the job market was slowing but not slow (!), with job gains remaining robust. So the U.S. central bank must balance risks as it considers how quickly it will continue to lower interest rates in the coming months.

Fed Vice Chairman Philip Jefferson said the September rate cut was appropriate, and that the risks to the central bank’s employment and inflation targets were now greater. close to equality. Jefferson added that he would observe the new data and that monetary decisions would be made meeting by meeting. For the moment, the official considers the economy solid, while inflation has fallen substantially and the job market has “cooled noticeably”. He anticipates continued progress on inflation, now much closer to the 2% objective.

Boston Fed boss Susan Collins said yesterday that policymakers should take a cautious, data-driven approach when lowering interest rates (!). Among her other rants, the official indicated that she was more confident about the return of inflation towards 2% in an orderly manner, against a backdrop of a still healthy labor market. Collins says she is attentive to the Fed’s two mandates, in the face of competing risks on inflation and employment. According to her, this is about “focusing on preserving current economic conditions”.

This Wednesday, investors will notably follow the final stocks of wholesalers for the month of August (4 p.m., consensus +0.1% according to FactSet), the weekly report from the Department of Energy on domestic oil stocks for the week ended 4 October (4:30 p.m.), as well as the FOMC Minutes (8 p.m.), report of the Fed’s last monetary meeting which was marked by an initial easing of 50 basis points. The day will also be busy with “fedspeak”, with Raphael Bostic, Lorie Logan, Austan Goolsbee, Thomas Barkin, Susan Collins and Mary Daly.

Tomorrow, the consumer price index for September will attract attention (2:30 p.m., consensus +0.1% month-on-month and +2.3% year-on-year, or +0.2 % and +3.2% excluding food and energy). Weekly jobless claims for the week ending October 5 will also be released at 2:30 p.m. (consensus 225,000), while the US budget deficit for September will be revealed in the evening (8 p.m., consensus -$15 billion). Thomas Barkin and John Williams of the Fed will speak during the session.

Finally, the markets will follow the American producer price index for September on Friday (2:30 p.m., FactSet consensus +0.1% compared to August and +1.6% over one year, or +0.2% and +2.7% excluding volatile items). The University of Michigan’s preliminary US consumer sentiment index will be released at 4 p.m. (consensus 71). Austan Goolsbee, Lorie Logan and Michelle Bowman will have their say during the day.

In Wall Street business news, Delta Air Lines, Domino’s Pizza et Tilray Brands will announce tomorrow. On Friday, the quarterly results “season” will be launched as usual on Wall Street by the big banks, with the financial publications of JP Morgan Chase, Wells Fargo et Bank of New York Mellon. BlackRock et Fastener will also announce the same day, before market.