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: The European Union facing the challenge of the energy crisis
- Faced with the spectacular rise in the price of electricity, the EU proposes emergency measures to reduce the energy bill;
- These are based on a reduction in electricity consumption and a cap on excess revenues for energy companies;
- This will not prevent gas and electricity prices from remaining high this winter as well as in 2023 and 2024 due to limited supply;
- There is an urgent need to take measures to avoid a liquidity crisis for companies operating on the futures markets.
Market review: Powell promises pain
- Fed: 75bp hike and acceleration of monetary tightening;
- Yields soar, carnage on equities;
- Substantial increase in Gilt issuance next year;
- The BoJ forced to intervene on the yen.
Stéphane Déo's podcast
- What about the 2023 State budget?
Chart of the week
In the United States, the percentage of the yield curve being inverted has risen sharply since this summer to currently stand at 57%.
This is the result of the strong monetary tightening carried out by the Fed to fight against inflation that is far too high. Short rates, crystallizing monetary policy expectations, thus rose sharply to become higher than long rates. The rise in the latter was more limited due to fears weighing on growth. This inversion of the yield curve is a good signal that the US economy is entering recession in the coming months.
Figure of the week
The impressive plunge of the Pound Sterling after the mini-budget presented by the government last Friday. The pound trades near all-time lows against the dollar.
