The suspense is non-existent: on Wednesday, the American Federal Reserve (Fed) will carry out a new, and fourth, “jumbo” increase in its key rates by 75 basis points, thus bringing the ceiling rate to 4%. The step is highly symbolic because the monetary institution will have increased the cost of money by a total of 375 basis points since the first increase in March, with the objective, for the moment far from being achieved, of combating inflation. Measured excluding food and energy, the PCE index, the Fed’s preferred indicator, continued to accelerate in September, to 5.1% over one year excluding food and energy, for total inflation of 6.2%.
Hope for a smooth slowdown?
“We had never seen such a strong and rapid tightening, even in 1994underlines the firm Oddo BHF. At this speed, the key rate is approaching what the Fed considers to be the high point of the cycle. This sparks debate over a possible moderation in the pace of rate hikes. It remains to be seen whether Jerome Powell, head of the Fed, will speak on the subject during his press conference, scheduled from 7:30 p.m., half an hour after the publication of the press release relating to the decision on the key rates. ” It seems inconceivable to us, given the way that forecasts have fallen through in global markets over the past twelve months, that Jerome Powell would attempt to guide the market too aggressively for December, particularly with two reports on the job (including one this week, [vendredi]) and two on inflation scheduled before the next meeting “, judge the economists of Deutsche Bank.
According to them, a further hike of 75 basis points is still likely next month, before a possible slowdown in the pace in January. At the same time, they cannot rule out a more offensive scenario, which would push interest rates Fed-funds at 5%. The employment indicators mentioned by Deutsche Bank are the official reports of the Bureau of Labor Statistics. The first, relating to the month of October, will be unveiled on Friday. Before that, the market will take note on Wednesday of the ADP survey of job creations in the American private sector last month. The consensus expects 200,000 net hires, after 208,000 in September.
A publication at the Cac 40, Axa
While the Fed’s decision is undeniably the key event of this session, other indicators are also on the agenda, such as the indices Final S&P Markit PMI for the manufacturing sector in France, Germany, the euro zone and the United Statesas well as bGerman Trade Balance in September and the weekly stocks of petroleum from the US Department of Energy.
On the business front, the results season at the end of September is continuing, with the expected publications of CGG, Imerys, Sogeclair and, above all, toAxamember of the Cac 40. The market will be attentive to the impact of hurricane Ian on the results of the American damage insurance subsidiary Axa XL.