It’s a “poof” of relief for the markets. In July, inflation numbers released at 2:30 p.m. and so expected by operators came in lower than consensus expected, immediately provoking a reaction to the rise in major indexes, hoping to see the Fed will raise its key interest rates during its next meeting treat a little less aggressively in September.
In July, consumer prices held steady for over a month, less than the 0.2% increase analysts had expected. Annual inflation is just 8.5% versus 8.7% expected and 9.1% in June. Same observation with “core” data, ie excluding volatile elements like food and energy. Prices rose 5.9%, still year-on-year, amid fears of a rise to 6.1%.
Sanofi slows down the cac 40
Finally, the Cac 40 was up 0.52% to 6,523.44 points after holding steady throughout the morning on a trading volume of $3 billion. In New York, the Dow Jones increased even more, by 1.58% and the Nasdaq Compositewhose “tech” and growth stocks are most sensitive to rate hikes, rose 2.35%.
If the few French “techs” took advantage of the movement, STMicroelectronics Earn 3.3% world line 2.9%, Dassault systems 1.9% and Capgemini 1.6%, just like the sector of luxurydecisive for the development of the Paris index, another heavyweight of the dimension, Sanofislowed the Cac 40. The drugmaker’s stock fell more than 8% again, still weighed down by halted recruitment for trials of its drug tolebrutinib for certain types of multiple sclerosis and a deterioration in for-sale UBS analysts.
” Consumer prices were flat in July and there is a good chance prices will fall significantly in Augustcomments Paul Ashworth of Capital Economics. Gasoline prices fell 7.7%m/m and as crude oil prices continue to fall, they will fall even further by 11% in August. Food prices rose 1.1% last month, continuing a string of very strong increases, but this is the next deflationary decline. »
A little breather for the Fed?
The Analysis Bureau continues: All in all, with headline inflation still at 8.5% and core inflation at 5.9%, it’s still not the significant fall in inflation the Fed is aiming for. But it’s a start and we expect stronger signs of easing price pressures in the coming months. »
The reaction on the futures markets was also prompt fed fund, as calculated by the CME, which is now only 38.5% awaiting the prospect of the Federal Reserve raising interest rates by 75 basis points in September, up from nearly 70% this morning. A twist of the screw by 50 basis points is now more likely to be expected with a probability of 61.5%.
“ The market seems reassured by the fact that we appear to have peaked inflation and should see further declines in the second halfCommonwealth Financial Network management company Judge Brian Price interviewed by CNBC. It looks like the likelihood of another 75 basis point hike by the Fed has fallen significantly after this report and we may only see a 50 basis point hike at the next meeting. If energy prices continue to fall, I expect the inflation data to ease in the coming months. »