Read our market review and find out all about our theme of the week in MyStratWeekly and its podcast with our experts Stéphane Déo, Axel Botte, Aline Goupil-Raguénès and Zouhoure Bousbih.
Summary
Topic of the week: Overheating?
- It is now extremely unlikely that Europe will experience two negative quarters, fears of a difficult winter due to the energy crisis are no longer justified;
- On the other hand, the very ambitious fiscal stimulus has pushed activity above its potential on both sides of the Atlantic. Paradoxically, the risks of overheating are increasing;
- The risk could be that central banks would be forced to do even more and there would be a recession at the end of the year;
- Markets were overly pessimistic a few months ago, being almost certain of a recession that never happened. Are they now too complacent, when the second half of the year could prove difficult?
Market review: Disinflation or disillusion?
- Powell takes note of job market strength;
- T-note yields rebounds to 3.70% area, profit taking in equities;
- BoJ: Kazuo Ueda nominated as next governor after Kuroda;
- Stability in spreads despite protection buying on iTraxx Crossover.
Stéphane Déo's podcast
- An on the spot comment on US inflation figures?
- What about French unemployment figures?
Chart of the week
The European Commission’s latest quarterly industry survey shows signs of supply problems.
Only 30% of businesses say there are no production-limiting factors. That’s one of the lowest in history.
26% who have problems recruiting, one of the highest historical and far above previous cyclical peaks.
37% who still have problems with supply chains, this is the main problem. We had never exceeded 15% before 2020! This is on a totally unusual level, even though it has fallen a bit since the peak of last quarter.
Figure of the week
The European Commission expects growth of 0.9% in the Eurozone this year, without a single quarter of negative growth. That’s plausible, although it sounds a tad optimistic.
