The Paris Stock Exchange remains on its guard at the start of the afternoon, the Cac 40 being content to evolve around its closing levels of the previous day, at 6,370.61 points, and Wall Street could give up a few points in the first exchanges, pending the crucial meeting of this session, Jerome Powell’s speech at the Jackson Hole symposium, at 4 p.m., Paris time. An event that brings together, as every year in this small town in Wyoming, the great fundraisers of the planet but also finance ministers and renowned economists.
All eyes are therefore on this speech by the Fed boss, with the operators having the firm intention of gleaning the slightest information likely to guide them in the evolution of American monetary policy. In sight, the next meeting of the FOMC in September, for which the scenarios of a rise of 50 or 75 basis points in key rates are on the table. It is this last option that holds the rope for the moment, with a probability of 62.5% according to the tool developed by the CME from futures contracts on Fed-funds. The yield on 10-year bonds is set above the 3% threshold, at 3.063%, in anticipation of a firm position from Jerome Powell.
The main statistics of the day in the United States are, in this context, relegated to the background. In July, household spending only increased by 0.1%, against an expected increase of 0.5%, as did their income (+0.2% against +0.6% expected), but prices remained under control, with a slight increase of 0.1% over one month excluding volatile elements such as food and energy, and 4.6% over one year.
A summer gain of nearly 8% for the Cac 40
Since the end of June, the Nasdaq has gained more than 13%, the S&P 500 has gained 10% and the Nikkei 8% like the Cac 40. A very good lead, which allows, for the moment, to rank this summer among the best in the history of the Paris Stock Exchange. But everything could go very quickly and a good part of these gains would not fail to evaporate if Jerome Powell shows a firmness that he had seemed to put aside a little during the last FOMC meeting in July.
” Powell doesn’t have much to complain about the weak economystill believes Ipek Ozkardeskayahowever, the risk of too much rate tightening is now a concern expressed by several members of the Fed, this could be a dovish argument that would be a relief for the equity markets. Be careful though, the latest data showed an easing of pressures on consumer prices thanks to a slowdown in those of energy and raw materials. But the Fed knows these energy prices are too volatile to trust. » « A single word or a tiny phrase could make the market go up or down “, concludes the Swisquote analyst.
Words chosen with great care
” I have no doubt that Powell will have chosen his words very carefully today, all too aware of the consequences of the slightest shift in his message, indicates on his side of Craig Erlam, at Oanda. It’s kind of ridiculous that the markets place so much weight on such things, but that’s the situation we find ourselves in and I expect the Fed Chairman to be very clear in the message that he wants to send. The difficulty for Powell is that there are the words investors desperately want to hear and those they have repeatedly ignored since the July Fed meeting. »