CAC40: neither volatility nor volume, clear tension in US/EU rates

(CercleFinance.com) - The Paris Bourse had recovered 0.
5% on Tuesday, but is now losing it again (CAC back below 7,450): scores have been frozen since midday (5 hours in an "algorithmic straitjacket") and the weekly result is -0.2%: in reality, everything seems to have been frozen for 4 sessions.

In principle, investors have been back from vacation for 15 days, but volumes are not picking up and less than 1.1MnsE has been traded in 8 hours.
The mood is just as wait-and-see for the E-Stoxx50 (-0.4% to 4.840), with Frankfurt faring best with a stagnation (compared with -0.5% this morning) and Amsterdam holding firm with -0.2%.

On Wall Street, the indices have been paralyzed for the past 3 days: spreads between +0.05 and -0.05% the previous day, identical behavior this Wednesday, with the Nasdaq posting between 0.00 and 0.1%, and the S&P500 down by 0.1%.

While the Federal Reserve will make official tonight the end of its restrictive monetary policy by announcing its first rate cut since March 2020 (the 'pivot' was expected 9 months earlier), bets remain tight ahead of its statement.

Falling inflation and the slowdown in the US labour market argue in favour of easing, but the resilience of growth argues in favour of a limited reduction in the cost of money.

Following recent comments by several Federal Reserve officials, the markets estimate the probability of a 50-point rate cut tonight at 63%, according to CME Group's FedWatch tool.

But the hypothesis of a smaller 25-point cut has not yet been totally ruled out, as it is still considered credible by 37% of market participants.

The Commerce Department yesterday reported a sharp 9.6% rebound in US housing starts in August compared with the previous month, to an annualized rate of 1,356,000, following a 6.9% fall in July (revised from an initial estimate of -6.8%).
The 'number' of the day also points in the direction of more robust activity: building permits for US homes - supposed to foreshadow future housing starts - climbed by 4.9% to 1,475,000 last month, while housing deliveries rose by 9.2% to 1,788,000.

There were also eurozone figures this morning: the eurozone's annual inflation rate slowed from 2.6% in July to 2.2% in August, according to Eurostat, which thus confirms its flash estimate for last month, while that of the European Union also fell by 0.4 points to 2.4%.

On the bond front, the prospect of a rate cut on both sides of the Atlantic seems "in the cards": the yield on '2034' T-Bonds rose by +5pts to 3.6940%, while the '2-year' gained +6.1pts to 3.6530%.

In Europe, the ten-year German Bund gained +4.5 basis points to 2.1900%, while the yield on our OATs rose by 5.6 basis points to 2.9160%, while Italian BTPs gained +7 basis points to 3.5750%.
Finally, Spanish Bonos, with +6 basis points, returned to the 3.000% threshold.


While the fall in the greenback had favored black gold prices, Brent and US light crude are back down by around 0.3% to around $73.3 (Brent) and $70.7 (WTI) respectively, pending this afternoon's release of US weekly inventories.

The euro is up 0.05% at 1.1118, erasing the previous day's decline.
Finally, the ounce of gold remains unchanged at $2571, 0.4% off its all-time high.

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