Bye “Tina”, hello “Tara”. Since bonds offer investment alternatives, while central banks raise interest rates, equities are neglected. So, suffice it to say that the pause observed today in the increase in yields of debt securities had triggered an opportunistic movement and had allowed the Cac 40 to recover a little… until everything changed at the end of the session.
The Parisian index closed down 0.27%, at 5,753.82 points, recording a tenth session of decline in eleven trading sessions. In New York, the rate of two-year sovereign bonds in the United States fell for the first time since September 7: -0.02 points, to just under 4.3%. At the day’s low, these bonds were trading at a rate of 4.1986%. That was before St. Louis Fed Chairman James Bullard spoke at the CEPR International Monetary Policy Forum in London. Following his remarks, the rate of ten-year T-Bonds has also started to rise again.
The most “hawkish” member of the US central bank has reiterated that inflation is a serious risk that the Federal Reserve must respond to “appropriately” at the risk of compromising its credibility. The cycle of monetary tightening will continue, interest rates will continue to rise and will remain higher ” during sometime “. Today the rate of Fed Funds is traded within a range of 3 to 3.25%. James Bullard sees it rising to around 4.5% even though he admits that there is a risk of recession.
On Wall Street, the Nasdaq Composite, which gained more than 2% before the central banker’s intervention, is only up 0.8%.
+20% for gas prices
Just before the intervention of the president of the St. Louis Fed, another piece of information had already cast a chill over the European markets, including the Cac 40 which, this morning, had rebounded up to 1.4%.
The Nordstream 1 and 2 gas pipelines linking Russia to Germany have been hit by unexplained leaks in the Baltic Sea, authorities in Denmark and Sweden have said, raising suspicions of sabotage. On these announcements, gas prices jumped in Europe. Just before the Paris Stock Exchange closed, futures contracts in Rotterdam gained up to more than 20%. According to Swedish television, the National Seismology Center, based on measuring stations installed in Sweden and Denmark, recorded powerful underwater explosions in the leak areas.
Shortly before 5.30pm, Russian gas giant Gazprom said one of the last two sources of supply remaining to get gas to Europe – via Ukraine – was at risk of being cut off due to a dispute. legal. Traders are pricing in the prospect that Europe will have to live without Russian gas this winter.
