(Boursier.com) — The trend is uncertain before the stock market on Wall Street this Wednesday, pending the monetary verdict of the Fed and the press conference of its boss Jerome Powell. The S&P 500 loses 0.1% and the Dow Jones stabilizes, while the Nasdaq gives up 0.1% in pre-trade. Yesterday evening, the US rating ended higher, however limiting its gains following the powerful initial rally following the less dramatic than expected US inflation figures for the month of November.
On the Nymex, a barrel of WTI crude is currently gaining 1% to $76.1. An ounce of gold returned 0.3% to $1,820. The dollar index lost 0.1% against a basket of currencies.
For its last monetary meeting of the year, the Fed will probably announce a rate hike of 50 basis points tonight, a little more moderate than previous gestures, since the American central bank had just raised its rates four times 75 bp in order to fight against heavy inflation.
The Fed should therefore raise its fed funds rate to between 4.25% and 4.5%, up 50 basis points and to the highest level since December 2007.
According to the CME Group’s FedWatch tool, the current probability of a 50 basis point rate hike on Wednesday is 79.4%, compared with a 20.6% probability of a strong move of 75 basis points. Remember that the rate of ‘fed funds’ is currently housed between 3.75 and 4%, after four consecutive rate increases of 75 basis points to fight against inflation.
After the fastest tightening of US monetary policy since the 1980s, the central bank should therefore increase its benchmark rate on Wednesday to a range of 4.25% to 4.5%. The Fed is also expected to signal further tightening of 50 basis points next year, according to economists polled by Bloomberg, and an anticipation that once they reach that peak, they will remain on hold through 2023.
Financial markets agree on the short-term view, but see a rapid rate pullback later next year, which doesn’t quite square with the bank’s latest comments. Investors expect price pressures to ease faster than the Fed expects, which fears inflation will prove persistent.
This week’s meeting in Washington is yet another opportunity for Powell to emphasize that officials expect to keep rates high to beat inflation, as he did in a Nov. 30 speech when he stressed that the policy would remain restrictive “for a while”, recalls Bloomberg. Over the past five interest rate cycles, the average hold at a peak rate was 11 months, and these are periods when inflation was more stable, the agency adds. The Fed also sent the message that the key rate should remain at its maximum level for some time…
Powell’s press conference will be held at 8:30 p.m. today. ‘Jay’ Powell said last week that it “makes sense to moderate the pace of rate hikes as we approach the level that will be sufficient to bring inflation down.”
The latest US inflation figures for November 2022 released yesterday came out more subdued than expected. The consumer price index for November rose just 0.1% from the previous month, against a FactSet consensus of +0.3%. Excluding food and energy, the surprise is also positive, with a ‘CPI’ up 0.2% compared to October, against 0.3% consensus. Over one year, the November CPI increase was 7.1% (consensus 7.3%), or 6% excluding food and energy (consensus 6.1%).
Thus, the annual US inflation rate for the month of November, at 7.1%, is indeed the lowest since December 2021.
The average hourly wage for the month of November appreciated for its part by 0.6% compared to the previous month, or 5.1% over one year, in line with market expectations.
Tomorrow Thursday, operators will also be very attentive to monetary announcements from the ECB and the Bank of England.
Among the morning statistics around the world, Japanese industrial production for October fell more than expected (-3.2%). Swedish inflation was higher than expected, but that of the United Kingdom for November came out less consistent than the consensus (+0.4% in harmonized European data compared to the previous month and +10.7% over a year). In Spain, consumer prices rose by 6.8% year-on-year based on harmonized European data, a larger increase than expected. Finally, European industrial production for October disappointed, down 2% compared to the previous month against -1.1% FactSet consensus.
According to today’s report, US import prices for the month of November fell by 0.6% compared to the previous month, in line with market consensus. Export prices fell 0.3%, versus -0.8% FactSet consensus.
Values
Delta Airlines gaining altitude before stock market on Wall Street. The American airline has just raised its financial forecasts. Profits should almost double next year, according to the anticipations of the Atlanta group, which expects adjusted earnings ranging from $5 to $6 per share in 2023 against $3.07 to $3.12 for 2022 guidance. The consensus was $4.8 adjusted EPS for next year and $2.9 for this year. Ed Bastian, CEO of Delta, talks about demand for air travel that remains robust at the end of the year. In an investor update, Delta is raising its adjusted EPS estimate for the fourth quarter of 2022 to between $1.35 and $1.4 – significantly better than the previous guidance from October which ranged from 1 to $1.25. Regarding revenues, the group is planning for the fourth quarter to grow by 7 to 8%, against 5 to 9% previously expected.
Pfizer, the American pharmaceutical giant, benefits from an additional order in the USA. The American federal state will thus pay nearly two billion additional dollars to buy 3.7 million additional doses of Paxlovid, its antiviral treatment for Covid-19. This order is in addition to the 20 million doses previously purchased by the United States. The delivery of the new doses is expected in early 2023, says Pfizer. The Biden administration previously agreed to pay $10.6 billion for the 20 million doses. The price per dose is similar in the new contract.
Carlyle Group would struggle to raise the $22 billion it had targeted as its biggest fund, the Financial Times reported on Wednesday, citing three sources that said the March 2023 deadline is unlikely to be met. The firm is said to have asked its investors for an extension until the end of August because it is expected to miss this March 2023 target to raise funds, the FT indicates. The report, quoting one of the people, said Carlyle had so far raised around $17 billion for the fund.
You’re here. Goldman Sachs cut its price target from $305 to $235 due to a change in valuation method. In addition, several of the banks that lent a total of $ 13 billion to Elon Musk for the takeover of Twitter are preparing to partially write off these receivables in their accounts, Reuters has learned from three sources familiar with the matter.