2023-11-05 20:06:49
Goldwasser Exchange takes stock of what you need to know to start the week.
Rate markets: is the Fed done with its rate hike cycle?
Does the status quo announced by the United States Federal Reserve (Fed) on November 1, 2023 constitute a tipping point in the rate hike cycle? This is what market participants now dare to think. Indeed, the fact that the Fed has left “fed funds” rates unchanged, in a range of 5.25% to 5.50%, for the second time in a row reinforces the probability that the American central bank will carry out a new status quo in December, traders believe. If this were to be the case, market participants believe that the Central Bank would have finished with its cycle of rate increases that began in March 2022. The scenario gained further depth on the eve of the weekend, the figures on the October US employment showing a cooling of the labor market. A cooling also noticeable on Treasury bond yields. The interest rate on the 10-year American bond fell sharply to 4.519%, following having briefly crossed the 5% mark on October 23. The downward movement of around 50 basis points since this October peak is therefore quite spectacular.
Note that the decline was amplified by the announcement of the quarterly financing plan of the US Treasury, with a total amount of bonds to be issued revised downwards (compared to expectations).
In Europe, the ECB does not yet seem to be at this stage, as Isabel Schnabel recalled. Influential member of the ECB, Isabel Schnabel stressed that a further increase in interest rates may be necessary to bring inflation under control. However, unlike the United States, if the published economic indicators show falling inflation in the euro zone, they also show a sluggish economy, like the clear contraction in growth in the third quarter.
Once once more, investors will therefore carefully monitor the published statistics, such as this Wednesday, November 8 when retail sales in the euro zone or the October inflation figures in Europe will be published. The same day, the market might also react to a speech from Jerome Powell, while a speech from Christine Lagarde is on the agenda for Friday, November 10, as are British growth data or the consumer confidence index. consumers from the University of Michigan.
10-year sovereign yield 03/11/2023 27/10/2023 03/01/2023 United States 4.519% 4.841% 3.746% Germany 2.648% 2.834% 2.387% Italy 4.446% 4.809% 4.487% Belgium 3.272% 3.497% 3.011%
Primary market: gloomy results for the month of October
The last few days have been rather calm on the primary market, reflecting a month of October that was also not very lively in terms of new issues. The stress factors are known: volatility on the interest rate front, an American 10-year rate which (briefly) exceeded the 5% mark, instability in the Middle East and negative results published by large companies. All these factors have encouraged Corporate issuers to postpone their debt issues until later. However, a few companies have approached the market. This is the case of Accor, Glencore, H&M and Valeo, to name just these examples.
Some recently issued bonds Issuer Coupon Maturity Cutoff Size Devise Accor 7.250% Perpetual 100,000 500 million EUR Glencore Funding LLC 6.500% 06/10/2033 2,000 1 billion USD H&M Finance BV 4.875% 25/10/2031 100,000 500 million EUR Valeo 5.875% 12/04/2029 100 .000 600 million EUR
Currency markets: coops slack for the dollar…
The dollar fell significantly (-1.45% for the Dollar index in five sessions) once morest the major world currencies, including the euro, following the monetary status quo of the Fed, but not only that. The figures on American employment (published on the eve of the weekend), below expectations, further reduced the Fed’s margin to raise its rates. The scenario of a Fed having reached the peak of its interest rates was reinforced, further reducing the attractiveness of the greenback. For its part, the euro was able to count on the declarations of Isabel Schnabel, member of the ECB board. According to Isabel Schnabel, a new rate increase from the ECB will be necessary in Europe to help put an end to inflation.
Currencies in sight 03/11/2023 27/10/2023 02/01/2023 EUR/USD 1,0732 1,0564 1,0668 GBP/USD 0,8667 0,8716 1,2048 USD/YEN 149,39 149,66 130,74
Equity markets: un November started on good foundations
After a red October for stocks, the stock markets started November on a good footing, helped by the decline in bond yields and expectations of the end of the rate hike cycle in the United States. Values sensitive to changes in interest rates (real estate, technology, etc.) were the first to benefit.
Performance of stock indices as of 03/11/2023 Index Over the past week Year-to-date Over one year Euro Stoxx 50 +3.99% +10.04% +13.19% CAC 40 +3.71% +8.86% +9.84% BEL 20 +6.47% -5.34% -2.75% Nasdaq Composite Index +6.61% +28.78% +28.67%
Certain individual stocks are also doing well. This is the case of Adecco which is among the winners of these last sessions with an increase of 14% since the publication of its quarterly results. In a difficult macroeconomic environment, Adecco gained market share in all regions, with an increase in its margin thanks to pricing discipline, productivity gains and good cost control, according to Denis Machuel, CEO of the specialist. temporary work.
A hard blow, however, for the shareholders of the Danish group specializing in renewable energies Orsted. They saw the value of their stake plummet on the Copenhagen Stock Exchange following Orsted announced the cancellation of a huge offshore wind farm project in the United States. This cancellation will result in a depreciation of 28.4 billion Danish crowns, or approximately 3.8 billion euros, said the world number one in offshore wind. in a press release published this Wednesday, November 1st. The following day, S&P placed Orsted’s “BBB+” credit rating on “negative” credit watch.
The entire Goldwasser Exchange team wishes you a good week.
Sunday November 5, 2023 – 9:30 p.m.
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