(News Bulletin 247) – The Paris Stock Exchange should open without much change on Monday morning, investors remaining concerned about the evolution of bond yields, which revives fears of an imminent entry into recession.

Around 8:15 a.m., the ‘futures’ contract on the CAC 40 index – July delivery – gained 3.5 points to 7,180 points, auguring the start of the session around equilibrium.

As a sign of the growing fears of stakeholders, the Paris market lined up five consecutive sessions of decline last week, which led it to post a weekly decline of around 3%.

The CAC index has now seriously dented its major support of 7200 points, which seems to potentially endanger the threshold of 7100 points, or even the more psychological 7000 points.

On Wall Street too, the S&P index on Friday put five weeks in a row up by retroceding 1.5% over the week, its worst weekly performance since March.

In Europe as in the United States, yield spreads between bonds with shorter maturities and longer maturities are now reaching extreme levels, a signal often seen as the harbinger of a recession.

The bond market reflects fears surrounding the persistence of inflation on both sides of the Atlantic, which leads investors to anticipate further rate hikes from the Fed and the ECB.

The slowdown in economic growth has become an obvious fact for investors to take into account since the unaccommodating speech of Jerome Powell, the chairman of the Federal Reserve, delivered last week, which was accompanied by poor economic statistics.

The lags between the inversion of the yield curve and the entry into recession are however very variable, note the teams of Janus Henderson.

‘Research has shown that since 1969, the gap between the inversion of the three-month/10-year yield curve (for at least 10 consecutive trading days) and the onset of a recession has ranged from five to 16 months ‘, recalls the management company.

Caution could also prevail before the publication on Friday of inflation figures in Europe and the United States which could provide a clearer indication of the extent of the next rate hikes by central banks.

On the other hand, only the Ifo index of the business climate in Germany is on the program of the day.

Geopolitics could also penalize the trend after the failed coup attempt by Russian mercenary group Wagner over the weekend.

‘It is entirely possible that the markets are largely unaware of the events that unfolded in Russia at this stage, because if what really happened is far from clear, in any case the most chaotic scenario of a Russia sinking into civil war has been avoided for the moment,” react the strategists of Danske Bank.

Gold took advantage of this climate of uncertainty, posting a gain of 0.4% to $1,936 an ounce, as did the yen, which continued to benefit from its safe haven status to return to annual highs against the dollar. .

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