“The next 30 hours could be the calm before the storm”
Now is not the time to take risks. While tomorrow at 2:30 p.m. in the United States will release the latest US inflation numbers, which are due for July, the Cac 40 is very cautious this Tuesday morning, content to be not far from yesterday’s close (-0 .08% to 6,519.45 points). No catalyst from Wall Street, which ended after a much better start to the session in scattered order (+0.09% for the Dow Jones, -0.12% for the S&P 500, -0.10% for the Nasdaq Composite) .
On both sides of the Atlantic, stock markets have rallied around 10% in a month, particularly on hopes of a turning point in Fed monetary policy early next year. Investors were not only convinced – at least that was the case until Friday’s release of a jobs report that was too strong for their liking – that the Federal Reserve was on the verge of halting rate hikes, but also anticipated the next rate cuts According to the activity statistics, the Federal Reserve had done its best work in the fight against economic overheating and inflation in the first six months of the year.
How about 100 basis points?
The consumer price index for the month of July, which will be published early tomorrow afternoon, will influence the behavior of the Fed in its aggressiveness in raising the base rate fed fund in September. Since Friday and the announcement of more than 500,000 job creations in July in the US, twice as many as expected, investors have revised their expectations and again expect a plus of 75 basis points (vs. +50 basis points). Points shortly before the release of the statistics). Citi economists are not ruling out a 100 basis point hike, which would bring the Fed’s interest rate range to a 3.25-3.5% range from 0% in March.
” The next 30 hours could be the calm before the storm ‘ writes Jim Reid, strategist at Deutsche Bank this morning. And he remembered yesterday: there was good news on the inflation front, found in the results of the New York Fed’s Consumer Price Expectation Survey. ” Their inflation expectations were falling over the one-year, three-year and five-year horizons. That’s sweet music to the Fed’s ears, because if this trend continues, it means the Fed may not have to be as aggressive in raising interest rates, as one of its major fears is that expectations of higher inflation rates will become a self-fulfilling prophecy lead to real inflation as firms adjust prices and workers negotiate wages accordingly. »
Phase III study at Valneva
In terms of stats, there are few things to report within the Cac 40. Sanofi loses 2% after announcing it will stop recruiting for the clinical trials of tolebrunitib, a treatment for multiple sclerosis. UBS has also downgraded to neutral from buy.
Next to the flagship index Valneva 4% up. The biotech and the American company, Pfizer, with which it is affiliated, have announced that they have started a phase III clinical trial of their experimental Lyme disease vaccine, VLA15. Pfizer will pay Valneva a $25 million milestone payment at the start of this Phase III study.