The recent US economic releases boosted equity markets to higher ends yesterday while EU markets remained on the sidelines: Dow Jones Industrial Average: +1.25%, Nasdaq: +1.03%, S&P500: +0.94% and Euro Stoxx 50: -0.25%. The Federal Reserve published strong December US industrial production M/M data of 0.90%, above expectations (consensus at 0.50%), following a November revised value of -0.10%. The reaction on the market was a greater equity markets stimulation, at the expense of a 10-Year UST Note price that fell by -0.50% along with a yield valued at 2.59% (+2.10% 1-day increase). Later in the day we also had the Beige Book report that allowed investors to get a sharper insight on what the Fed’s monetary policy will look like in January 31st 2018 and confirmed: a “modest-to-moderate” growth; increasing difficulties to find qualified workers within the labor market; modest wage growth and moderate capital expenditure increase in manufacturing, construction and transportation in several localities. Waiting for the Federal Reserve’s decision that will take place in less than two weeks, we do believe that economic indicators, whether from a production, consumer spending, sales or salary standpoint remain at tolerable levels and are majorly anticipated by US monetary authorities.
By Vincent-Frédéric MIVELAZ