Falls on Wall Street to close a week marked by the Federal Reserve

Wall Street to close a week marked by the Federal Reserve

Wall Street fell in all its values ​​to close a week in which the Nasdaq 100, which groups the 100 largest companies in the technology index, marked a new all-time high on Thursday. Both the Nasdaq, the Dow Jones and the S&P 500 fall compared to the closing values ​​of this Monday.

Stock exchanges continue to analyze the messages released on Wednesday by the United States Federal Reserve (Fed). The central bank anticipated the first rate hike to 2023, significantly raised its inflation forecasts for 2021 and its president, Jerome Powell, confirmed that they had begun to discuss the withdrawal of its asset purchase program, the famous tapering.

The Fed may be a bit anxious about its monetary policy framework,” say the managers of Amundi Asset Management. “If the US labor market recovers more strongly in the coming months and inflation remains high, they may feel the need to advance their tapering cycle,” they add.

Jerome Powell acknowledged that “changes in demand can be large and rapid, and bottlenecks, contracting difficulties and other restrictions could continue to limit how quickly supply can be adjustedincreasing the possibility that inflation is higher and more persistent than we expect.”

The hawkers (hawkers who support tougher monetary policy) clearly have more influence. Importantly, the Fed is advancing its monetary tightening program by one year. If the US economy returns to its pre-employment level crisis in 2022, and if the ‘advance’ in inflation continues or even increases, the Fed could raise rates from 2022,” explains Christophe Morel, chief economist at Groupama AM.

It will be interesting to see how investors discount this readjustment of the monetary policy forecasts of the world’s most powerful central bank. “We see that the Fed is no longer significantly behind the curve and reduces one of the main tail risks that concern investors,” say UBP managers.

“In particular, that of a persistent rise in inflation over the medium term, as the Fed’s guidance on rates indicates that they will not let inflation get out of control. Overall, we see the message from the Fed as positive, as they become less ‘dovish’ (in favor of stimulus) due to the impressive prospects for economic growth, “they conclude.

Finally, Fidelity analysts comment that “the Fed is likely to start signaling its stimulus reduction plans. In this sense, the Jackson Hole Policy Symposium in August is the next key event that President Powell could use to do it”.

On the other hand, James Bullard, president of the Federal Reserve Bank of St. Louis, has announced that they expected a growth in inflation, “but this has been higher than expected. And he added that the debate on ‘tapering’ “is open.”

COMPANIES AND THER MARKETS

At a business level, Goldman Sachs has begun to negotiate with Galaxy Digital the investment in bitcoin futures, according to CNBC.

Likewise, large banks such as Morgan Stanley, JP Morgan and Citigroup have warned that their trading income will suffer a strong year-on-year decline in the second quarter, especially as it affects the fixed income business.

In addition, they also noted that consumer credit was not performing as well as expected due to the high level of savings currently held by American families.

In other markets, West Texas oil fell 0.41% to $70.75. The euro depreciates 0.39% and changes to 1,186 dollars, while the ounce of gold advances 1%, to 1,792 dollars, while the yield of the US 10-year bond relaxes to 1,506%. Finally, bitcoin falls 1.71% and changes to $37,135, falling below the 38,000 barrier.