The Paris Bourse is set to open slightly higher on Wednesday, with a degree of caution prevailing two days ahead of the release of US employment figures, likely to provide valuable clues as to the future timing of Fed rate cuts.

At around 8.15am, the 'future' contract on the CAC 40 index was up 16 points at 7412.5, suggesting an opening in the 7400-point zone.

Investors are still betting on a forthcoming rate cut in the USA, even though Federal Reserve Chairman Jerome Powell warned last Friday that there was still a long way to go before inflation could be brought down to around 2%.

However, they are hesitant about the timetable the Fed will choose to adopt, and are eagerly awaiting Friday's release of the monthly report on job creation in the USA to try and guess the central bank's intentions.

For the time being, the markets are counting with a 55% probability on a Fed rate cut in March, according to the CME Group's FedWatch barometer.

The ADP survey, published two days before the official employment figures, will therefore be closely watched by investors in the early afternoon to refine their judgement.

Other indicators due later in the day include US trade balance figures and productivity figures for the third quarter.

Investors are hoping that all these statistics will support the prospect of a soft landing for the US economy and a rapid fall in the cost of credit.

In Europe, industrial orders in Germany should confirm the recessionary spiral threatening the country, while retail sales in the euro zone should show that households are finding it hard to recover from the inflationary shock.

But beyond today's announcements, it is above all Friday's employment figures that will count.

After November's good performance, the markets should continue to catch their breath while they wait for a clearer picture, which seems to rule out any big positions.

Against this backdrop, the Paris market looks set to continue its flat consolidation until, perhaps, it recovers its annual highs (above 7.581 points) by the end of the year.

In the opinion of analysts, the underlying trend remains clearly bullish, even if Wall Street closed on a cautious note last night, despite the marked easing in bond prices.

While the Nasdaq saved the day with a gain of 0.3%, the Dow Jones ended the session with a loss of around 0.2%.

The interest-rate market was nevertheless euphoric, with dizzying spreads reaching -10 points for ten-year paper, which fell to 4.17%, an almost three-month low.

Buyers of Treasuries already seem convinced that hiring will begin to reflect an economic slowdown that will reinforce the Fed's intention to 'pivot' and cut rates as early as March.

Despite long rates continuing to fall sharply, the dollar remains firm, particularly against the euro, which is retreating to around 1.0790.

Oil prices continue to show their heaviness, with Brent crude this morning nibbling 0.3% to minus $77.5 a barrel, confirming the cautious positioning of institutional investors and traders on black gold.

However, the teams at DeftHedge, a specialist in risk management, warn that "news pointing in the direction of higher prices could lead to a sharp rebound in volatility, and the hasty unwinding of short positions, which would in turn accentuate volatility".

In their "shock" forecasts for 2024, analysts at Saxo Banque yesterday pointed to a possible spike in oil prices to $150 a barrel by mid-year, due to stronger-than-expected demand.

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