2023-12-17 20:52:00
Goldwasser Exchange takes stock of what you need to know to start the week.
Rate markets: the Fed opens the way to several rate cuts
If the end of the year is on the horizon, the macroeconomic agenda remains punctuated by statistics, which should fuel speculation on the next monetary policy decisions of the ECB and the Fed. In this regard, mark in your diary the publication this Friday, December 22 of the Personal Consumption Expenditures (PCE) Price Index in the United States for November. This indicator is one of the data scrutinized by the Federal Reserve (Fed) to define its monetary policy. Its publication takes on a very special flavor after the recent announcements from the Fed. Remember, last Wednesday, while the US central bank decided to maintain its rates, as expected, it also indicated in its new economic projections that its interest rates had probably peaked, paving the way for a reduction in the cost of money in 2024.
This change in tone from the Fed has not gone unnoticed on the bond market. The US 10-year benchmark yield fell, falling below the 4% threshold, returning to its level of last July. The two-year yield, which reflects rate expectations, has fallen back to its level of last June, losing around 30 basis points since the Fed’s press release.
Investors are therefore hoping for good PCE inflation figures. They are also betting on the fact that the consumer confidence index, also published this Friday, December 22, fuels the hypothesis of a soft landing for the American economy. The day before, Thursday the 21st, market players will be able to read the final figures for American growth in the third quarter. A growth which was positively surprising when the latest data on the subject was published.
In any case, the optimism currently observed across the Atlantic on rates contrasts with the situation in Europe, where the ECB has opted to maintain borrowing costs. However, indicators of economic activity at half mast, published on the eve of the weekend, reassured the markets in their expectations of a fall in the cost of money in Europe, from next year. Even if the European Central Bank also has to deal with still high inflation…
10-year sovereign yield 15/12/2023 08/12/2023 03/01/2023 United States 3.914% 4.230% 3.746% Germany 2.019% 2.279% 2.387% Italy 3.719% 4.055% 4.487% Belgium 2.589% 2.869% 3.011%
Primary market: the new Engie, Iliad and Loxam bonds are popular
If activity on the primary market should calm down somewhat in the coming days, in view of the end-of-year holidays, issuers of a certain notoriety have entered the doors of the primary market in recent days. This is the case for Engie, Iliad and even Loxam. Their debt raisings aroused a certain interest on the primary market, but also on the secondary market as illustrated by the clear increase in prices.
Some recently issued bonds Issuer Coupon Maturity Cutoff Size Devise Engie SA 3.875% 06/12/2033 100,000 900 million EUR Iliad SA 5.375% 15/02/2029 100,000 650 million EUR Loxam SAS 6.375% 31/05/2029 100,000 600 million EUR
Currency markets: a temporary weakening of the dollar?
On the foreign exchange market, Norges Bank has stood out in recent days by deciding, against all expectations, to raise its main key rate by 25 basis points (to 4.5%) to curb inflation. This announcement had the effect of supporting the Norwegian crown against a euro weakened by indicators confirming the contraction of activity in the euro zone.
The dollar was also under pressure, depressed by the prospect of a rate cut next year in the United States. But this bout of weakness should only be temporary. Indeed, according to Bloomberg, a growing number of strategists believe that the dollar will surprise in 2024, by strengthening, because the American economy will prove more resilient than other major economies.
Currencies in sight 15/12/2023 08/12/2023 02/01/2023 EUR/USD 1,0895 1,0763 1,0668 EUR/GBP 0,8594 0,8578 1,2048 EUR/JPY 154,87 156,02 130,74
Equity markets: towards the end of the year marked by new records?
The prospect of a rate cut in the United States next year, the signs of a slowdown in inflation across the Atlantic, the monetary status quo of the ECB… So many elements which have pushed investors towards assets at risk and brought certain indices, such as the Cac 40 in Paris, the Dax in Frankfurt and the Dow Jones on Wall Street, to new historic highs.
Performance of stock indices as of 12/15/2023 Index Over the past week Year-to-date Over one year Euro Stoxx 50 +0.58% +19.92% +19.60% CAC 40 +0.93% +17.35% +17.73% BEL 20 +1.04% +0.85% +2.04% Nasdaq Composite Index +2.85% +41.54% +38.38%
No record, however, in Brussels, where the Bel 20 index is still far from its historic record. It could perhaps benefit in the future from the inclusion of Syensqo, the new company bringing together the now separate specialty chemicals activities of Belgian chemist Solvay. Introduced on the stock market last Monday, Syensqo has since gained 13.5%. The action should gain visibility by entering the Bel 20 index this Monday, December 18.
A week to forget as quickly as possible, on the other hand, for the professional software publisher Oracle, which reported quarterly results lower than consensus, which fueled some concern among investors. The stock has lost more than 10% since publication from the press release on December 11.
The entire Goldwasser Exchange team wishes you a good week.
Sunday December 17, 2023 – 9:52 p.m.
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