The week got off to a bad start on the Paris Stock Exchange, the Cac 40 dropping more than 1% at midday (-1.92% at the morning low), at 6,420.47 points, weighed down by its industrial components but also banking. ArcelorMittal, Stellantis, Renault, Saint Gobain, Veolia Environment, Agricultural credit and Societe Generale appear among the biggest setbacks of the day, along withUnibail-Rodamco-Westfield, weighed down by fears about consumption in shopping malls, which have caused high inflation. In New York, we are also preparing to continue downward, the future contracts suggesting declines of 0.9% to 1.4% of the major indices. On Friday, the Dow Jones lost 0.86% and the Nasdaq Composite just over 2%. The euro, for its part, fell below the 1 dollar mark before oscillating, since then, around this threshold.
All eyes are on Jackson Hole at the weekend, with fears that US Federal Reserve Chairman Jerome Powell will adopt a more incisive tone on monetary policy. It is from Thursday evening that the main heads of central banks, finance ministers and renowned economists on the planet will meet in this valley in the west of the State of Wyoming for the event organized by the Fed of Kansas and discuss the state of the economy and the monetary policy to be pursued. The Fed boss will intervene at 4 p.m. Paris time. Note that Christine Lagarde will not make the trip. Isabel Schnabel will represent the European Central Bank.
Watch out for that Jackson Hole
This year, ” Jackson Hole could have a bigger impact on investors’ moods than usual, as they don’t really know where the market is going. The market does not really know where the Fed is going », Analyzes Ipek Ozkardeskaya, of Swissquote.
July’s stock market rally was primarily triggered by anticipation that the US Federal Reserve might ease policy and start cutting interest rates if the US economy slips deeper into recession. But there is nothing, in fact or in words, to suggest that any rate cut may be looming over the next few quarters.
Quite the contrary. Members of the Fed have come and gone in recent weeks to confirm the institution’s proactive policy, saying that monetary conditions will tighten until there are tangible signs of a return to the inflation target of 2 % are noticeable.
50-50
” For the Fed, getting inflation down to target is non-negotiable. It is therefore quite possible that President Powell will declare [vendredi] that the Fed will raise rates as sharply and for as long as it takes to bring inflation down “Said Steve Englander, of Standard Chartered. We remember that at the same time, during the Jackson Hole 2021, the president of the central bank still described inflation as ” transient »…
The CME tool built from futures contracts on Fed-funds assigns a 50% equivalent probability to a 50 basis point hike in policy rates at the September FOMC meeting, in the range of 2.75% to 3%, and that of a stronger 75% hike basis points, or 3% to 3.25%.