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CAC40: the rise finally takes hold in the absence of volume

( - The almost total absence of volume favors a rise (+0.
4%) which has been gaining strength unchallenged since 4pm... without any catalyst from the United States (Wall Street being closed this Monday).

After two consecutive weeks of decline, the Paris Bourse begins the last week of May on a slightly more sustained note, with the CAC40 rising to 8,125, practically its best level of the day.

Volumes were so skeletal (0.75 bn euros traded) that it looked like half a trading session (as at 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 were setting record after record (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: although 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 -4pts to 2.5440%, while our OATs have shed -4.5pts to 3.026%.... 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 have been cautious for the past week.

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.

FOREX is naturally remaining very calm, with the Euro gaining just under 0.1% against the Dollar towards 1.0855.

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