New Year, Still Impatient Markets


  • The ECB probably found itself vindicated by the core inflation data last week
  • Market is now looking at the US economy as a glass half full. The Fed may take away the proverbial bowl of punch
  • The House of Representatives finally getting a Speaker does not extinguish the US institutional fire

Another acceleration in year-on-year core inflation in December in the Euro area probably solidified the ECB’s hawkish line unambiguously expressed in December. When controlling for base effects, the picture is a bit less concerning – on a 3-month basis, core inflation has decelerated from a peak in September – but the central bank is probably finding more reasons to continue hiking at a fast clip as surveys suggest the real economy is more resilient than feared. If the economy does not “slow down enough” on its own, as the Euro area is dealing better than expected with the end of Russian gas supply, then aggregate demand would need to be nudged further down by more monetary tightening to take inflation decisively down.

By contrast, the latest US surveys suggest the economy is softening quite fast over there. This probably contributed to the market choosing to ignore still robust job creation in December to focus on an unexpected slowdown in wages and the decline in working time. We continue to be uncomfortable with the market pricing though. Forwards have the Fed’s terminal rate below 5% again for June 2023, and price 50bps worth of cuts, instead of 25 earlier last week. For now, signals of labour market softening are still indirect. The Fed is likely to focus on traditional indicators, such as the unemployment rate, which has just hit its lowest level in 53 years. Besides, the Fed may consider it is forced to “offset” the market’s reluctance to respond to its signals by more actual tightening. Our simple Index of Financial conditions has already loosened by 75bps relative to a peak in late October/early November. Corporate spreads have declined. The Fed may consider that not enough of its monetary tightening is finding its way to the corporate sector.

Finally, we look at the US Congressional dysfunction, which is not put to rest by Kevin McCarthy finally winning enough votes to become Speaker of the House. We should brace ourselves for another debt ceiling drama this year.

New Year, Still Impatient Markets
Descargue el artículo completo (581.67 KB)

Artículos relacionados

Actualización de mercados

Finanzas en 2 minutos: El FMI prevé un crecimiento «estable pero decepcionante», mientras que la actividad en la zona euro sigue sin despuntar

Actualización de mercados

Prices, jobs, and personalities. Here comes the US election

Visión de mercados

October Monthly Investment Strategy - A far-reaching US election

    Advertencia sobre riesgos

    El valor de las inversiones y las rentas derivadas de ellas pueden disminuir o aumentar y es posible que los inversores no recuperen la cantidad invertida originalmente.

    Volver arriba
    Clientes Profesionales

    El sitio web de AXA INVESTMENT MANAGERS Paris Sucursal en España está destinado exclusivamente a clientes profesionales tal y como son Definidos en la Directiva 2014/65/EU (directiva sobre Mercados de Instrumentos financieros) y en los artículos 194 y 196 de la Ley 6/2023, de 17 de marzo, de los Mercados de Valores y de los Servicios de Inversión. Para una mayor información sobre la disponibilidad de los fondos AXA IM, por favor consulte con su asesor financiero o diríjase a la página web de la CNMV www.cnmv.es

    Por la presente confirmo que soy un inversor profesional en el sentido de la legislación aplicable.

    Entiendo que la información proporcionada tiene únicamente fines informativos y no constituye una solicitud ni un asesoramiento de inversión.

    Confirmo que poseo los conocimientos, experiencia y aptitudes necesarios en materia de inversión, y que comprendo los riesgos asociados a los productos de inversión, tal como se definen en las normas aplicables en mi jurisdicción.