(CercleFinance.com) – After its timid recovery the day before, Wall Street should start falling again on Friday morning, affected by a concern that has become constant among investors, namely the persistence of inflation.
Half an hour before the opening, futures contracts on the major New York indices fell between 1.1% and 1.7%, announcing a marked decline at the start of the session.
While economists were anticipating a slowdown, price increases accelerated in the United States in August, notably due to a rebound in gasoline prices.
In January, the core household consumption index (PCE) – the Fed’s preferred measure of inflation – came out at 4.7% over one year compared to 4.6% in December.
These inflationary pressures are raising fears of an acceleration of rate hikes by the Federal Reserve, while several members of the institution have adopted a very firm tone in the need to fight against inflation in recent weeks.
Another element arguing for the continuation of monetary tightening, household consumption expenditure rebounded by 1.8% in January, a progression much higher than consensus forecasts.
This dual development, which bears witness to inflation that is still insufficiently controlled and vigorous economic activity, seems unlikely to induce the Fed to abandon its restrictive policy.
The probability of a rate hike of 50 basis points in March, and not 25 points, is now almost 30% according to the CME Group’s FedWatch barometer.
Inflation figures, which argue for a continuation of the rate hike cycle in the United States, are further advancing the dollar, which is now trading around 1.0550 against the euro.
Yields on Treasuries are also going up, for the same cause which is supporting the greenback, with a ten-year paper which is recovering beyond 3.91%.
Investors will learn shortly after the opening of the final figure of the Michigan confidence index, which should be confirmed at 66.4 for the month of February.
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