(CercleFinance.com) – It’s a rather unexpected ending: buyers have firmly taken control on the eve of the weekend, despite a speech by Jerome Powell in Jackson Hole which seems to close the door to a pivot of the FED (the starts to fall in rates) before the spring of 2024, i.e. probably 3 quarters, whereas it was anticipated for June 2023 12 months ago.
Wall Street ended with substantial gains with +0.73% on the Dow Jones, +0.67% on the S&P 500 (i.e. +0.8% over the week) and 0.94% on the Nasdaq… which posted -0.6% around 5:00 p.m. (a good recovery which allows it to garner +2.5% over the week and to return to the +30% bar since January 1).
The stars of the day were Intel +2%, ZScaler +2.2%, Adobe +2.5%, Analog +2.6%, Lucid +2.7%, Tesla +3.7%, Intuit +4.1 %.
Note Nvidia’s relapse of -2.4%, which fell in the space of 48 hours from $505 to $460 this evening.
It was apparently an ‘uneventful day’ in the US bond market as the benchmark ’10-year’ T-Bond ended perfectly unchanged at 4.232%.
However, it deteriorated to around 4.285% after Jerome Powell’s speech and the ‘2-year’ which is tending towards 5.06% shows its worst level since June 2006.
But Wall Street doesn’t even seem to notice.
The boss of the FED however showered in a few sentences the hopes of rate relaxation in the ‘foreseeable future’.
He did not bother with convoluted formulas to tell investors that there will be no monetary easing until inflation is close to 2% and stabilizes around this level.
Jerome Powell indicates that ‘inflation has slowed down but remains too high: the problem is far from being completely resolved, it is not certain that the current drop in prices will last’.
‘The current underlying growth remains higher than the historical average, which could maintain inflationary ferments’: it will therefore be necessary to maintain restrictive monetary conditions over time and the FED stands ready to raise rates if necessary.
In other words, a rate cut is not an option during the next FED meetings and if a status quo achieves consensus in mid-September (at 80%), it is 50/50 as far as a new round is concerned. vis at the beginning of November (target 5.50/5.75%).
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