The CAC 40 is marking time while waiting for PMIs, PCE inflation and speeches from the Fed
The CAC 40 has stalled since last week after climbing to a 7-month high, slightly above its June and August peaks, thanks to investor speculation of less aggressive Fed tightening.
However, the market could resume the downward path in the coming days as these expectations are likely to be dampened by PCE inflation at the end of the month and/or the numerous interventions by Fed officials in the coming days.
Indeed, the risks are tilted to the downside as speculators have almost completely eclipsed the scenario of another Fed rate hike of 75 basis points next month in favor of the scenario of a 50 bps. The probability of another 75 bps rate hike is only 24%, compared to 77% on October 19 and 40% before the US CPI published on November 10.
In addition to central bankers’ interventions and the PCE inflation release, traders will also be watching November’s flash PMIs. Released on Wednesday, the PMIs will give an idea of the state of economic growth in the main economic regions.
Figures below expectations could be bullish in the very short term, as it would increase the chances of a slowdown in monetary tightening, but it would be bearish in the long term, as it would increase the chances of a recession.
Daily chart of the CAC 40 price – key levels