Higher than expected, the consumer price index in the United States makes a strong move by the Fed inevitable next week. What undermine the morale of investors.
Should interest rates be raised for the third time in a row by 75 basis points to stem inflation in the United States? The monetary policy committee of the American Federal Reserve, which will meet on September 20 and 21, will have to decide this question, even if, in the eyes of the operators, the answer is beyond doubt: it is yes. They became certain of this on Tuesday with the announcement of a stronger than expected increase of 8.3% over one year in the consumer price index in August. Measured excluding energy and food, inflation even accelerated by 0.6% from one month to the next and reached 6.3% on an annual basis.
Equity markets, well oriented the day before, suffered the blow, both in Europe and in the United States, where the Nasdaq Composite plunged 5.16% on Tuesday, weighed down by Meta, the parent company of Facebook (- 9.4%), in particular. The slide continued until the end of the week. Neither US retail sales nor weekly jobless claims – which suggest the economy is holding up well to rate hikes – have kept the hawks at bay. On the contrary, some even go so far as to anticipate a 100 basis point rise in key rates, or 1 whole point. What reinforce the anticipations of recession.
A harbinger of an upcoming reversal, the inversion of the US yield curve, with two-year Treasury yields higher than ten-year yields, has not been so strong for forty years, according to calculations by ‘Allspring Global Investments. On the eve of the weekend, the Cac 40 is only 6,077 points, down 2.17% over five days. The Parisian index is doing better than the Nasdaq, however, which is about to show its worst weekly performance since January.
CELINE PANTEIX