(News Bulletin 247) – Wall Street will try to maintain its upward trajectory on Tuesday, a task that promises to be far from easy given the persistent concerns surrounding the health of the economy.
Half an hour before the open, futures on the major New York indices are moving around balance, suggesting an opening with little change.
The Dow Jones and the S&P 500 have just posted three consecutive sessions of increases thanks to a timid return of investor appetite for risky assets.
The lack of bad news from the banking sector gave market players some breathing room after a string of high volatility sparked by fears about the global financial system.
Despite this stock market lull, uncertainties remain, not only in terms of the health of the economy or inflation, but also on new question marks, such as commercial real estate.
All of these concerns lead JPMorgan strategists to believe that equity markets may have bottomed out in the first quarter, at least for this year.
“We do not believe that the rebound movement will continue given the risk of error linked to the evolution of monetary policy,” explains the American bank.
“In short, we don’t see a fundamental improvement in the risk/reward profile of equities until the Fed gets well into its rate-cutting cycle,” the New York-based firm points out.
The general climate on the markets therefore remains largely dominated by questions about the future evolution of interest rates in the United States and by the rise in bond yields that these questions result from.
In the space of a weekend, expectations of a 25 basis point rate hike from the US Federal Reserve in early May rose from 17% to 44%.
The risk appetite behind the recent rebound in equities has resulted in a loss of interest in assets deemed the safest, such as government bonds, leading to a sharp rise in bond yields. Treasuries.
The rate of 10-year US Treasury bonds rose again on Tuesday to return above 3.54%, far from the floor of 3.30% hit at the end of last week.
The markets will take notice at the very beginning of the session of the Conference Board’s US consumer confidence index.
While the recent turmoil in the financial markets could weigh on household sentiment, the ConfBoard survey places particular emphasis on employment conditions which, to date, remain solid.
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