(CercleFinance.com) – The CAC40 and the E-Stoxx50 caught fire as soon as the publication of the American CPI came out slightly below expectations at +7.1% (but nevertheless up sequentially from +0.1 to + 0.2% compared to October).
The CAC soared up to +2.5% towards 6,825 (level of February 14, 2022 or 20/12/2021) and seemed to want to settle above 6,800.
An unexpected pullback on Wall Street after a cannonball start (+2.5%) reduced the gain of the CAC40 by -1%, to 6,750 Pts.
The S&P500 saw its gains reduced from +2.6% to +1.5%, the Dow Jones to +0.7%.
The ‘VIX’ which had strangely soared from +9 to +10% on Monday evening (while Wall Street was up sharply, an extremely rare scenario) fell back by -5%.
The Euro-Stoxx50 also dipped and gained only 1.6% to 3,985 after peaking at 4,035, the highest since February 21.
The bond markets reacted positively with spreads of -15 basis points on T-Bonds at 3.461% and -3 basis points on this side of the Atlantic (OAT at 2.3700 and Bund at 1.904%).
According to the CPI calculated by the Labor Department, the US consumer price index rose 7.1% in November compared to the same month of 2021, its lowest annual rate since December 2021, while the consensus was for 7.2/7.3% (compared to 7.7% in October and 8.2% in September).
Excluding energy (+13.1%) and food products (+10.6%), two traditionally volatile categories, the annual inflation rate stood at 6% last month, a level in line with expectations.
Sequentially, i.e. between October and November 2022, consumer prices in the United States increased by 0.1% in raw data and by 0.2% in ‘core’ data, excluding energy and food products.
This may have tempered the ambient euphoria, rents continue to rise, the price of raw materials too… and the figures for December will perhaps not be so reassuring.
The markets have already happily ‘paid’ for the scenario of more moderate inflation and a FED interrupting its rise between 4.75 and 5.00% (and more than 5.5% like two months ago).
Good news also this morning with the ZEW economic sentiment index for Germany: while it was at rock bottom in August, it rose by 13.4 points to reach a value of -23.3 points in the current December 2022 survey, its third consecutive increase since September.
“The vast majority of financial market experts expect the inflation rate to decline over the next few months,” said ZEW Chairman Achim Wambach, pointing to the temporary stabilization in energy markets.
In addition to this improved outlook, the assessment of the current economic situation in Germany also continues to improve, with its index standing at -61.4 points in December, 3.1 points more than the previous month… but this remains a very worrying level that portends a severe recession.
Final November inflation figures for the country were released this morning. Inflation slowed in Germany in November to reach 10%, against +10.4% in October, confirm final figures published by Destatis, the federal statistics office.
According to William Gerlach, manager for France at fintech iBanFirst, the Fed – like the Swiss National Bank, the Bank of England and the European Central Bank ECB on Thursday – should be satisfied with a rate hike of 50 basis points tomorrow. evening and Thursday noon.
On the bond market, a certain confidence seems to have prevailed since the end of November – reinforced by the ‘CPI’ on Tuesday – knowing that several members of the Fed have recently mentioned the opportunity to slow down the pace of rate hikes.
On the FOREX, the euro jumped 1% and quoted 1.0640 against the greenback.
The Dollar Index plunged -1.2% to 103.95 and erased all its gains since June 25th.
On the oil market, Brent and US light crude are up +3% (to $80.3 and $75 respectively) due to the cold spell currently raging on both sides of the Atlantic.
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