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CAC40: the absence of the City and W-Street are making themselves felt

( - After two consecutive weeks of declines, the Paris Bourse is starting the last week of May on a slightly more buoyant note (+0.
2% to 8,110), but with volumes so skeletal (0.6 billion euros) that it looks like half a trading session (like Christmas).
This was due to a bank holiday in London and New York: 'Spring Bank Holiday' and 'Memorial Day' respectively.

By dropping around 0.1% on Friday (to 8094 points), the Paris market had lost around 1% over the past week, reducing its gain since the start of the year to 7%, while the US indices set a string of records (this was the case on Friday for the Nasdaq and the S&P).

The Dow Jones, which seems to be completely outstripped by tech-sensitive indices, gave up more than 2% last week.
Industrial stocks remain vulnerable to interest-rate tensions, as we all know... but the surprise is that the Nasdaq's growth stocks, which are even more so, were in no way penalized by T-Bonds yielding 4.45% on 10-years and 4.95% on 2-years.

In the absence of the slightest indication from the US, we are concentrating on the rare 'macro' data published in Europe: business sentiment in Germany remained unchanged in May, with the ifo institute's index holding steady at the previous month's level of 89.3 points: while companies are less satisfied with their current situation, their expectations have improved.

The manufacturing, trade and construction sectors are recovering, while the services sector is slightly affected", says the research institute, for whom "the German economy is emerging from the crisis one step at a time".
Bund yields have eased by -4.3pts to 2.5400%, while our OATs have erased -5pts to 3.020%.... but in insignificant volumes.

We'll have to wait until Friday to see rates ease more significantly -eventually- if the latest 'PCE' inflation figures in the USA, and then the conventional price index (CPI) in the Eurozone, show signs of moderation.

Analysts are optimistic that disinflation will continue on both sides of the Atlantic, paving the way for further monetary easing... but fixed-income markets are cautious.

Thursday's publication of a new estimate of US GDP will also be closely watched to learn more about the ongoing slowdown in US activity.

An initial estimate published at the end of April had indicated that GDP had grown at an annual rate of 1.6% in the first quarter, compared with growth of 3.4% in the fourth quarter of last year.

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