(News Bulletin 247) – The publication a few minutes ago of stronger than expected producer price indices in the United States caused a reversal of polarity in pre-opening, suggesting an opening in the red, investors showing themselves worried about the issue of the terminal rate (the “arrival” rate) of Fed Funds. Because if a 50 basis point rise in Fed Funds is almost certain for the last FOMC of the year, it is the shape of the trajectory of rates in 2023 (namely its degree of flattening) and above all the value estimated “terminal” rate that focus the attention of trading rooms. Immediately, the Treasuries 10-year, 10-year federal sovereign bond yields, are moving forward towards 3.50%.
The Fed wraps up its last monetary policy meeting of the year next Wednesday.
The producer price index inflated 0.3% in November, against a target of 0.2%, and excluding food and energy from the basket, the index climbed 0.4% against consensus at 0.2%. To follow at 4:00 p.m. the second macroeconomic meeting of the day: the US consumer confidence index (Conference Board) in preliminary data.
“The markets seem to be directly projecting themselves on the next stage, the anticipated fall in rates at the end of 2023, without worrying too much about what may happen in the meantime: a probable deterioration in the fundamentals (falling margins, contraction of results in a majority of sectors in the United States in the 4th quarter), and a deterioration with a delayed effect in economic conditions in 2023”, deciphers Vincent Manuel, Chief Investment Officer (Indosuez Wealth Management).
KEY GRAPHIC ELEMENTS
On Thursday the Nasdaq Composite retraced higher the full extent of a consolidation flag between roughly 11,000 and 11,500 points, in strong volumes, with an open on session lows, and a close exactly on the high points. If this does not bode well for a final exit from the top, a little air has certainly been found. But the amplitude of a bypass flag has been clearly defined. It is within this flag that the oscillations will continue. An exit from below, not yet definitive, is possible.
FORECAST
Considering the key chart factors we have mentioned, our opinion is negative on the Nasdaq Composite index in the short term.
This bearish scenario is valid as long as the Nasdaq Composite index is trading below the resistance at 11250.00 points.
CHART IN DAILY DATA
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