(News Bulletin 247) – The CAC 40 remains anchored above 7,300 points after the publication of US inflation figures for July. The euro/dollar pair, for its part, remains at 1.10 dollars.

It was the most anticipated publication of the day and even of the week, during this summer break on the markets.

US inflation figures for July confirm the decline in inflationary pressures, following the announcement of a favourable trajectory for wholesale prices across the Atlantic.

In July, US consumer prices actually rose 2.9% year-on-year, after 3% in June. They are back to their lowest level since March 2021, and this slowdown is greater than expected, since economists surveyed by the Wall Street Journal were expecting a figure of 3% year-on-year. Over one month, inflation rose to 0.2% in line with expectations.

Core inflation, that is, excluding food and energy prices, is also in line with the consensus at 3.2%, according to data from the Bureau of Labor Statistics. And it is especially a little less than the 3.3% of June.

Rate cut in sight

“The data probably helps build trust among officials [de la Réserve Fédérale américaine] in the disinflation process, with price pressures continuing to move closer to the 2% target,” notes Michael Brown of Pepperstone.

While a rate cut is now a given for September, the main question animating the markets is whether the Fed will cut rates by a quarter or half a percentage point. And inflation figures released on Wednesday tipped the balance in favor of one scenario.

According to the CME Fed Watch tool, the probability that the Fed will proceed with a rate cut of a quarter of a percentage point has risen to 60.5% against 47% the day before, while the markets are now only 39.5% to envisage a more pronounced movement (0.5 percentage point) against 53% on Tuesday.

“Although market participants continue to argue over whether this cut will be 25 or 50 basis points (0.25 or 0.5 percentage points), a more modest move of 25 basis points seems a reasonable first step on the path to policy normalization, with a larger cut likely to be a sign of panic at this stage,” the strategist continued.

The CAC 40 accelerated slightly and gained 0.5% around 3:50 p.m., compared to 0.3% at mid-session. On the currency side, the euro also maintained its gains, or more precisely, the dollar lost ground. The eurozone currency gained 0.4% against the greenback to 1.1041 dollars in reaction to these data relating to American prices.

On Wall Street, indices are stable after these US inflation figures in line with expectations. The Dow Jones, the Nasdaq and the S&P 500 are barely gaining 0.1% after about twenty minutes of trading.