(CercleFinance.com) – The New York Stock Exchange should continue to retreat on Thursday, still penalized by the prospect of seeing the Federal Reserve maintain its high rates for a prolonged period.
Half an hour before the opening, the ‘futures’ on the main New York indices lost between 0.4% and 1.2%, announcing a new start to the session in the red.
As expected, the Fed left its rates unchanged yesterday and gave no clear signal as to its intentions for the coming months, its president, Jerome Powell, saying he wanted to ‘proceed with caution’.
The central authority nevertheless painted a relatively optimistic picture of the American economy, which seems to reduce the probability of rate cuts in 2024.
But the Fed has, at the same time, revised its inflation forecasts downwards, a decision which seems to militate in favor of a less restrictive monetary policy.
All these contradictory signals seem to disturb investors, which explains why the initial optimism of the markets quickly faded.
In this context, the yield on ten-year government bonds reached this morning, above 4.48%, its highest level since 2007, and now seems to be heading straight towards the 4.50% mark.
‘Wall Street continues to count on rate cuts in 2024, but we can clearly see that relief in bond yields is not ready to come in this uncertain economic environment which looks a lot like a Rubik’s Cube’, emphasizes Dan Ives, analyst at Wedbush.
Two indicators published Thursday before the opening appear to reassure the Fed in its desire to maintain a cautious and ‘data-dependent’ approach.
Weekly jobless claims fell by 20,000 to 201,000 last week, contrary to expectations, once again reflecting the strength of the American job market.
Conversely, the Philadelphia Fed index which measures manufacturing activity in the region went from +12 last month to -13.5 in September, for the 14th time in the red in the last 16 month.
In Great Britain, the Bank of England preferred to abandon a further increase in interest rates this Thursday, even if its decision was very close since five members of its steering committee voted for a ‘status quo’ and four in favor of a further increase.
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