(CercleFinance.com) – Wall Street should try Monday to extend its rebound that began last week, still favored by the appeasement of bond yields which had shaken it in recent months.
Half an hour before the open, the direction of the futures contracts signals an open on modest gains, ranging between 0.1% and 0.2%.
US equity markets posted a broad-based rebound last week that appears to reflect some renewed investor confidence.
The Dow Jones thus recovered by 5.5% over the whole of the past week, while the S&P 500 posted a weekly gain of 6.6%. The Nasdaq has recovered 7.5% in five days, its best performance since March.
‘We really got to oversold levels when the S&P 500 was down 24% from its recent highs,’ said one trader.
“And, as we know, oversold stocks always end up causing at least modest rebounds in stock prices,” he adds.
A form of return to risk appetite is taking place, even if investors seem to be getting more and more used to the idea of a coming recession.
A good number of participants nevertheless say to themselves that if there is a recession, it will simply be of a ‘technical’ nature, that is to say characterized by only two consecutive quarters of contraction in activity.
Investors seem especially willing to take more risk now that long rates have started to fall.
If the upward movement of equities is not denied, the decline in long rates is easing a little: after its marked gains at the end of last week, the bond market is again tense today, with a return 10-year Treasuries which rose to 3.2%.
In a strategy note released in the morning, Credit Suisse analysts believe that the rise in long rates has almost come to an end and that they are approaching ceiling levels in the immediate future.
Last Friday, the University of Michigan’s consumer confidence index showed a slightly less pessimistic inflation outlook for US consumers.
For some economists, this timid improvement suggests that the urgency of aggressive monetary tightening by the Fed is becoming less pressing.
On the macroeconomic front, durable goods orders rose 0.7% in May, according to the Commerce Department, a rise significantly above market consensus.
This is the only stat expected today.
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