CAC 40: The American 10-year is accentuating its decline

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Reassured by American inflation figures in line with expectations in “core” data, the stock markets resumed their ascent yesterday, on both sides of the Atlantic with new historic records to boot. For the CAC in particular, new zenith in closing data, at 8,240 points.

The statistical highlight of the week on inflation, the CPI (consumer price indices) therefore reassured after the more worrying publication the day before, producer prices. Excluding food and energy, retail prices increased by 0.3% in April, moderately and in line with the target. Over one year, these prices increased by 3.6%, compared to 3.8% the previous month.

“After short-term observations, we can however consider that the progress made in recent months has been made with difficulty. In 8 months, underlying inflation (CPI core) has only slowed by 0.5%. And this echoes the numerous declarations of members of the Fed, including those of its president, highlighting the lack of significant progress in recent months”, nuance Alexandre Baradez (IG France).

“We could therefore begin to think that the American economy needs to slow down a little more for the Fed to be convinced that inflation is indeed returning, and in a sustainable manner, towards the 2% objective, and thus proceeds to its first rate cut.”

To be complete on the macroeconomic level, retail sales, published yesterday at the same time, showed a monthly increase of 0.2%, in line with expectations, and the NY Fed manufacturing index (so-called Empire State index ), widened its deficit to -15.6.

In the wake of all these figures, the American 10-year bond continued its decline significantly, at 4.32%, creating a call for fresh air for stocks with high PERs, particularly on the technological side of the American rating. The Nasdaq Composite also closed up 1.40% at 16,742 points, at levels never seen before. The Dow Jones gained 0.88% and the S&P500 1.17% to 5,308 points.

On the values ​​side, Carrefour suffered the biggest drop in the CAC 40, losing 4.1%, while the JPMorgan bank went from “neutral” to “underweight” on the stock, equivalent to “sell” in its nomenclature. . Trigano fell 6.8% as the company burned through more than 100 million euros of cash in the first half due to a rise in inventories. Conversely, Euronext’s first quarter results (+3.2%) were well received by the market, the stock exchange operator having notably published an adjusted gross operating profit 7% higher than consensus, according to Jefferies.

An update on other risky asset classes: around 8 a.m. this morning on the foreign exchange market, the single currency was trading at a level close to $1.0880. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $78.60.

On the agenda this Thursday, to follow at 2:30 p.m. across the Atlantic the weekly registrations for unemployment benefits, the Philly Fed and housing construction permits, and at 3:15 p.m. the monthly report on the industry.

KEY GRAPHIC ELEMENTS

The resistance level of 8,120 points gave way on Thursday in insignificant volumes due to the absence of many operators. However, in the very short term, the new working framework is between these 8,120 points, and the absolute peaks close to 8,220 points, i.e. a thin band of around a hundred points. All taking place at the heart of an ascending channel.

FORECAST

Considering the key graphical factors that we have identified, our opinion is neutral on the CAC 40 index in the short term.

We will take care to note that crossing 9000.00 points would revive the buying tension. While a break of 8120.00 points would restart the selling pressure.

Hourly graph

Daily Data Chart