CAC 40: PCE inflation, the statistical high point before the holidays

(News Bulletin 247) – The CAC 40 (-0.95% to 6,517 points) fell again on Thursday, in a particularly nervous market, without federation. Losses widened with the pre-opening on Wall Street, on the heels of two macroeconomic releases that could heat up sovereign bond yields: US Q3 GDP first, up 3.2% in Q3 in final data, well above the first estimates, and weekly claims for unemployment benefits, still as close to 200,000 new units, auguring a continuation of strong tensions on the labor market, tensions themselves generating inflation.

These are all signs of the resilience of the American economy which will comfort the Fed in pursuing its strict rate policy. The yield on the 10-year government bond (Treasuries 10 yrs) warmed up again to flirt with 3.70%, as the publication of the PCE index looms on Friday, the Fed’s favorite measure in its “appreciation” of inflation.

On the values ​​side, Orpea (-5.26% to 5.794 euros) suffered the largest drop in the SBF 120 on Thursday and even since the start of the year, after having more than doubled the amount of asset write-downs that the company plans. to move on to the end of 2022. Current high beta automotive files (including equipment manufacturers) lost a lot of ground on Thursday, like Valeo (-3.40% to 13.495 euros), Renault (-3, 72% to 31.21 euros) or even Faurecia (-4.49% to 16.50 euros).

On the other side of the Atlantic, the main equity indices contracted on Thursday, like the Dow Jones (-1.05% to 33,027 points) or the Nasdaq Composite (-2.18% to 10 476 dots). The S&P 500, benchmark barometer of risk appetite in the eyes of fund managers, lost 1.45% to 3,822 points.

A point on the other risky asset classes: around 08:00 this morning on the foreign exchange market, the single currency was trading at a level close to $1.0600. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $78.10.

To follow as a priority on the macroeconomic agenda this Friday, at 2:30 p.m., the PCE consumer price index (Personal consumption expenditures price index), a measure favored by the Fed in its assessment of inflation. Also to be monitored, still across the Atlantic, are orders for durable goods, household income and expenditure, sales of new homes, as well as revised data from the consumer confidence index (U-Mich). As a reminder, earlier in the week, the US consumer confidence index, as defined by the Conference Board, was a very pleasant surprise.

KEY GRAPHIC ELEMENTS

The three-color index traced in one session the entire amplitude of the consolidation figure above 6,550 points, the integrity of which was threatened. The close on Thursday 15/12 was very close to the lows of the session, and the power of the volumes came to lend credence to the option of a break, at the end of this threshold. First attempt on Friday, with validation by the volumes. If the sectoral federation is not yet there, the technical signal sent is clearly negative. Immediately, the pullback Wednesday must be reversed or confirmed to send any usable signal. It has so far been confirmed. The relative trajectories of two remarkable moving averages also send a warning signal.

FORECAST

In view of the key graphic factors that we have mentioned, our opinion is negative on the CAC 40 index in the short term.

This bearish scenario is valid as long as the CAC 40 index is trading below the resistance at 6740.00 points.

Hourly data chart

Chart in daily data

©2022 News Bulletin 247