The main market trends for the next week
There next week there will be three main market movers: start up Wednesday June 1 by the Fed of the cut of the mega budget from 9 trillion dollarsinflation flash euro area in May which will be released on Tuesday and employment data Usa in May that will be released next Friday. The scenario will continue to be affected by war, high inflation and from the tightening monetary policies, which push towards a marked slowdown in the economy. However there has been a turning point: the markets are now looking more at stagflation than at inflation and this it makes them very uncertain and volatile but also less bearish, as shown by this week’s rebound a Wall Streetthe first in two months now, is the decline in Treasury yields.
Will last? “In the first part of the week – he explains Antonio Cesarano, Intermonte’s chief global strategist – i rebalancing of the funds namely the shopping from end of monthand, they can give one but no to the markets, while in the second part, let’s say from Wednesday onwards, the rebalancing effect will finish And will come back to weigh more on the margins of companies e inflation. However, I foresee a week tending more to the sun than to the rain. There may be some hiccups linked to inflation trends in Europe or to the labor market Use, however, for the markets, on average, I expect a hazy sun. And this even if from June 1st will start the Fed budget cutwhich, however, should make its effects felt on equities later, as it fully enters a regimeto Julyor August“.
“June for the markets, mainly due to the rebalancingit will be a month watershed – adds Cesarano – watching a little further, I think over of the summer the bearish phase will prevail on the marketsbecause liquidity effect that will begin to fade with the Fed’s budget cut. Then, in the fourth quarter, in October and even more so in November, we will see a recovery, as central bank aggression is expected to subside, which will probably go back to reducing interest rates “. (AGI)
Wall Street reverses course
This week tech stocks rebounded and some large US retailers they continued to reduce the own margins, that is, to cut earnings so as not to lose an impoverished clientele, while other big names in the large distributionhow Dollar Three, they fared better and that allowed a Wall Street to close the eighth well, reversing a downward trend that had lasted for nearly two months. The Dow Jones has closed these last seven days up by 6.2%after eight consecutive weeks at a loss, the longest negative streak since 1923, while the S&P 500 and Nasdaq both rebounded after 7-8 consecutive weeks with a minus sign.
To seal the octave, Fridaythe data of the PCE, the indicator monitored by the Fed to read the trend of inflation and to direct its monetary policy, which in April indicated a slight slowdown in US inflation and weakened but higher than expected consumer spending. Wall Street also benefited from a decline in the yield of the Treasury at 10, which has dropped from a high since the beginning of the year over 3% to less than 2.75%. Furthermore, “some indicators – explains Cesarano – are still in excess”, which means that the markets continue to perceive that they have fallen too much and could still bounce.
“In addition – he adds – Portfolio rebalancing takes place at the end of the month and therefore purchases of shares by mutual funds and at the end of the half year those, more consistent, of pension funds and sovereign wealth funds. JP Morgan estimates that stock purchases up to around the world are expected at the end of May 56 billion dollarie this flow will definitely help out Bags. TO at the end of June, the flow will be around 200 billion dollars. There next week however, at least until Tuesday, we will have the rebalancing of the investment funds that will help the lists, together with the decline in bond rates. Then, from June 1, the Fed will start cutting its balance sheet. “And this in the long run, presumably a July–Augustwill reduce liquidity on the markets and will not please the Bags.
On the other page: the moves of the central banks
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