CAC 40: The American 10-year soars after December employment

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The adage “Good news is bad news” saw its mechanics checked, oiled, and certified on Friday, in the wake of the publication of the monthly figures on American employment, of (too?) good quality.

As a reminder, this adage means that at a certain point of resilience and accumulation of good news (macroeconomic in this case), expectations of a firmer tone on the part of central banks can seize up the upward movement of stocks, by a rise in government bond yields.

But let’s first dissect the content of this report. First of all, the unemployment rate, expected to be stable at 4.2% of the active population, has the luxury of falling to 4.1%, very close to full employment. Job creation in the private sector (excluding agriculture), expected at 164,000, came to 256,000, very well above the target. Finally, and this is the positive point to remember, the moderation of the increase in wages, of +0.3%, in line with analysts’ expectations.

THE Treasuries 10 yearsyield on US Treasury bonds maturing in 10 years, immediately heated up to close to 4.80%…

“The American job market has once again shown itself to be very robust,” says Christian Scherrmann, American Economist at DWS.

“Current figures indicate that there will probably be no further interest rate cuts in January, while markets now only expect further cuts in the second half of the year. It remains to be seen whether the Continued robustness in labor demand is due to post-election euphoria. But if this robustness continues, it certainly argues in favor of the US Federal Reserve keeping interest rates at a level. higher even a little longer than this which was planned a few months ago.”

A Fed forced to be patient, therefore, and which, through the rise in temperature on yields, weighs on assets with high PERs across the Atlantic. The Composite thus lost 1.63%, and the S&P500 1.54% to 5,827 points on Friday.

On the value side in Paris, Airbus gained 0.6% after reporting 766 aircraft deliveries for 2024, a figure slightly lower than its expectations (around 770 units) but which analysts consider encouraging for 2025. Ubisoft limited its decline to 1.6% while the video game publisher once again postponed the release of the next Assassin’s Creed and lowered its revenue target for the financial year. in progress and indicated that it is considering potential capital-intensive operations. Viridien finished up sharply by 9%. The former CGG indicated, on the basis of preliminary data, that it had slightly exceeded its revenue and gross operating profit targets and significantly exceeded its cash generation target.

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 $1.0210. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $77.10.

On the macroeconomic agenda this Monday, no figure is to be followed as a priority. Agenda which will become denser tomorrow with production prices in the United States. And especially on Wednesday with consumer prices.

KEY GRAPHIC ELEMENTS

The CAC 40 index came to test an important graphic level on Monday at the close, 7,465 points, the solidity of which will be tested. The general working base remains, until proven otherwise, a vast band between 7,200 and 7,465 points, within which an indecision marked by nervousness is expressed.

The hanged man candle drawn on Wednesday on this resistance level testifies to the difficulties of franking, in a market which remains tense.

Below 7,500 points, once again the challenge of the week, the pressure is high.

FORECAST

Considering the key graphical 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 below resistance at 7500.00 points.

Hourly graph

Daily Data Chart