(News Bulletin 247) – The New York Stock Exchange is looking for a trend on Thursday following the publication of the monthly inflation report, which shows a slowdown in prices which should lead the Fed to ease off on the scale of the the rise in its rates.

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At the end of the morning, the Dow Jones advanced 0.2% to 34,047.8 points, while the Nasdaq Composite fell 0.3% to 10,903.4 points.

An hour before the opening of Wall Street, the Department of Labor announced that the consumer price index rose 6.5% in December 2022 compared to the same month of 2021, a rate perfectly in line with expectations of the economists.

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Excluding energy (+7.3%) and food (+10.4%), two traditionally volatile categories, the annual inflation rate stood at 5.7% last month, a level again in line with market expectations.

These figures show that the restrictive monetary policy conducted by the Fed in order to curb inflation is beginning to bear fruit, since the consumer price index had recently peaked at a 40-year high, at more than 9%.

‘Disinflation continues at the expected pace’, comments Axel Botte, Ostrum AM’s international strategist.

“The market remains convinced that the Fed will not raise rates as much as it indicated in the December projections,” he adds.

‘Less rate hikes creates a market dynamic favorable to risk (equities, credit and duration included) against a backdrop of a falling dollar’, recalls the analyst.

Investors now assess the likelihood of an increase in the cost of money by only 25 basis points on February 1 at 91%, against 77% yesterday, according to the barometer FedWatch.

Problem, investors had already anticipated these reassuring figures, as illustrated by the course of the American stock markets over the past ten days.

At yesterday’s closing price, the S&P 500 was up 3.4% since January 1, while the Nasdaq was up about 4.4% over the period.

On the bond market, the yield on ten-year Treasuries fell to 3.51% in the wake of the publication of the inflation report, while the dollar also fell back to return to the 1.0810 zone against the euro, a new low since last April.

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