(News Bulletin 247) – There will be no shortage of potential sources of volatility between today, Tuesday, and Friday, with elements allowing the market to further refine their estimates of the shape of the Fed Funds curve and their valuation of the terminal rate . The various half-yearly hearings of J Powell before the American Parliamentarians, combined with numerous statistical appointments on American employment, should maintain configurations in expanded consolidations on the indices on both sides of the Atlantic.
The Chairman of the Fed will speak today before the Senate Banking Committee and tomorrow before the House of Representatives. The clear opportunity to have the reaction of the top of the Fed to the latest publications of PCE, its favorite measure of inflation.
On US private employment, the week will be rich in publications (JOLTS, ADP, weekly registrations for unemployment benefits, and NFP at the high point on Friday). Major benchmarks which will constitute a solid working basis for the Fed in the construction of its monetary policy for the months to come, and which will in any case allow in the short term to tip the balance in favor of +25 or +50 points Fed Funds hike basis for the next FOMC. A job market which, through its chronic tensions, puts pressure on sovereign bond yields.
“Jobs are plentiful in the United States, but applicants are rare,” coolly summarizes Christian Scherrmann, American economist at DWS, who observes that “there are almost twice as many job offers as job seekers. The last time this ratio was this high was in the midst of World War II, when the industry had to reorient itself radically towards the production of weapons and many young Americans were serving overseas. “
On Thursday, weekly registrations for unemployment benefits once again came out below the threshold of 200,000 new units.
“Central banks and investors need to worry about unemployment rates, wage trends and inflation in the immediate term. It’s no wonder, then, that bankers and investors are so dependent on data and that interest rate and inflation expectations remain so volatile in the financial markets,” warns the economist.
The ACC managed to grab 0.34% to 7,373 points yesterday, in the absence of a sharp benchmark.
On the stock side, Elior rose 6.2% after signing an agreement to take over the multi-service branch of metal recycling specialist Derichebourg. Atos gained 7.6%, boosted by an increase in advice to buy from Bank of America. Accor (+2.9%) was also carried by an increase in recommendation, to “overweight”, from Barclays. Bonduelle (-4.4%) suffered profit taking after gaining more than 5.5% on Friday, following half-year results deemed satisfactory by the market.
On the other side of the Atlantic, the main equity indices ended in scattered order, at levels close to balance on Monday, like the Dow Jones (+0.12% 33,431 points) or the Nasdaq Composite (-0.11% to 11,675 points). The S&P500, the reference barometer of risk appetite in the eyes of fund managers, maintained the symbolic 4,000 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 $1.0690. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $80.50.
To follow as a priority on the macroeconomic agenda this Tuesday, the first part of the hearing of J Powell before the Parliamentarians, at 4:00 p.m.
KEY GRAPHIC ELEMENTS
The bearish engulfing sequence in powerful volumes and harami in much more discreet volumes, in the upper part of the bullish momentum movement, releases a short-term bearish potential, a potential that would only gain momentum in the event of a break in the moving average at 50 days (in orange) by its sister at 20 days (in dark blue). Note the closing close to the lows of the session on Wednesday, of course, but the absence of fear at this stage. The fight against this moving average is fierce, and violent oscillations chop this flattening trend line. The option of broader consolidation takes shape at this stage.
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 7422.00 points.
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