Global markets await the Fed with trepidation - Finance

Global markets await the Fed with trepidation – Finance

European stock markets rebounded on Tuesday after their losses the day before, a few hours before the start of the two-day meeting of the American Federal Reserve, which must materialize its promises of monetary tightening.

The financial centers of the euro zone rose sharply in the first exchanges: Paris by 0.62%, Frankfurt by 0.54%, Milan by 0.80% around 07:20 GMT (09:20, Brussels time). On the other hand, London, closed on Monday, fell by 0.46%. Around 11 a.m., the Bel 20 rose by 0.65%.

Most Asian markets are closed: Tokyo for “Golden Week” in Japan, Shanghai and Shenzhen due to the Labor Day holiday in China. Hong Kong quoted however, and took 0.14% in the last exchanges.

Investors’ eyes are on the US Federal Reserve, whose officials will meet for two days to announce measures to fight inflation, the institution’s priority for several months.

After the words, the deeds: almost all investors foresee an increase in key rates by half a percentage point to fix them at between 0.75% and 1%. It would be the first time in more than 20 years that the Fed would operate a tightening of this magnitude.

The US 10-year bond rate was once again approaching 3% (2.997%), after briefly exceeding it for the first time since the end of 2018.

Also, the Fed could announce the start of the implementation of the reduction of its balance sheet, selling around $ 95 billion per month of bonds it owns, including Treasury bills and asset-backed securities. mortgages.

“That would be nearly twice as fast as the last time officials started cutting the money supply, in 2017,” notes John Plassard, investment specialist at Mirabaud.

Investors are all the more feverish as, at the same time, global economic activity is showing signs of slowing down, from China with the confinement of Shanghai, to Europe, weakened by the war in Ukraine.

The European Union refuses to pay for its gas purchases from Russia in rubles and must prepare for a disruption in its supplies, warned the European Commission and the French Presidency of the Council after an emergency meeting of energy ministers of the 27 in Brussels.

The European Union’s sixth sanctions package against Russia will include the withdrawal of “other banks” from the Swift transaction system, a vital cog in global finance, its high representative for foreign affairs also said on Monday. , Josep Borrell, in Panama.

Oil was down slightly, the barrel of WTI due June losing 0.71% to 104.42 dollars, and that of Brent 0.76% to 106.76 dollars around 07:05 GMT.

The euro was stable against the greenback, at a particularly low level of 1.0504 dollars.

Bitcoin took 0.47% to 38,490 dollars.

The financial centers of the euro zone rose sharply in the first exchanges: Paris by 0.62%, Frankfurt by 0.54%, Milan by 0.80% around 07:20 GMT (09:20, Brussels time). On the other hand, London, closed on Monday, fell by 0.46%. Around 11 a.m., the Bel 20 rose by 0.65%. Most Asian markets are closed: Tokyo for “Golden Week” in Japan, Shanghai and Shenzhen due to the Labor Day holiday in China. Hong Kong quoted however, and took 0.14% in the last exchanges. Investors’ eyes are on the US Federal Reserve, whose officials will meet for two days to announce measures to fight inflation, the institution’s priority for several months. After the words, the deeds: almost all investors foresee an increase in key rates by half a percentage point to fix them at between 0.75% and 1%. It would be the first time in more than 20 years that the Fed would operate a tightening of this magnitude. The US 10-year bond rate was once again approaching 3% (2.997%), after having briefly exceeded it for the first time since the end of 2018. Also, the Fed could announce the start of the implementation of shrinking its balance sheet, selling around $95 billion a month of bonds it owns, including Treasury bills and mortgage-backed securities. “That would be nearly twice as fast as the last time officials started cutting the money supply, in 2017,” notes John Plassard, investment specialist at Mirabaud. Investors are all the more feverish as, at the same time, global economic activity is showing signs of slowing down, from China with the confinement of Shanghai, to Europe, weakened by the war in Ukraine. The European Union refuses to pay for its gas purchases from Russia in rubles and must prepare for a disruption in its supplies, warned the European Commission and the French Presidency of the Council after an emergency meeting of energy ministers of the 27 in Brussels. The European Union’s sixth sanctions package against Russia will include the withdrawal of “other banks” from the Swift transaction system, a vital cog in global finance, its high representative for foreign affairs also said on Monday. , Josep Borrell, in Panama. Oil was down slightly, the barrel of WTI due June losing 0.71% to 104.42 dollars, and that of Brent 0.76% to 106.76 dollars around 07:05 GMT. The euro was stable against the greenback, at a particularly low level of 1.0504 dollars. Bitcoin took 0.47% to 38,490 dollars.

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