(News Bulletin 247) – The statistical high point of the second part of the week has just been reached this Friday with the publication of the federal report on employment (November). The traditional NFP (Non Farm Payrolls) takes on its full meaning after the surprisingly flexible tone adopted by the boss of the Fed in the middle of the week and the publication of inflation (PCE) confirming a slowdown in the rise in prices. The report is likely to tense the mood again, showing signs of persistent tension. Because while the unemployment rate stood at a stable level, at 3.7% of the active population, the number of job creations in the private sector (excluding agriculture) remained high, at 263,000 new units, well above above target; and above all, the dynamics of wages (+0.6% on a monthly basis) shows no signs of easing.
“The world economy has slowed down, but is this enough to calm inflationary pressures and in particular those stemming from the level of wages?” asks Emmanuel Auboyneau, Managing Partner Amplegest. “That’s probably not the case in the minds of our central bankers, who alternate between more conciliatory rhetoric and a resolve to fight rising prices. A pause in rising rates is still premature at this stage.”
It is the whole question of the shape of the Fed Funds curve which obsesses the trading rooms, and which has a direct impact on the yields of sovereign bonds, with a Beta effect on the index which interests us here, which full of growth stocks.
Thomas Costerg, Senior US Economist at Pictet Wealth Management, expects “the Fed to raise the fed funds rate within a range of 5.0-5.25% (from 3.75-4.0% currently) by March 2023 and then maintain it at that level for the rest of the year. Fed messages could remain strong due to the rigidity of inflation expectations, the still high inflation in the services sector and the resilience of wage growth. At the same time, the central bank’s balance sheet is likely to continue to shrink in line with pre-planned plans, barring excessive deterioration in liquidity conditions.”
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 part of Thursday’s rise could be traced back to this Friday, confirming the extent of the flag mentioned.
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 11460.00 points.
CHART IN DAILY DATA
©2022 News Bulletin 247
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
