A little heavy-handed, but nothing spectacular, in reaction to J. Powell's "testimony" before the Congressional Financial Committees (this Tuesday and Wednesday afternoon).
The CAC40 has just fallen back from +0.2% to -0.3% (towards 7,350/7,345, with very little volume, i.e. less than 1.5 billion euros), while the Euro-Stoxx50 is down -0.5%.
The CAC40 flirted with 7,400pts again this morning, its rise remaining close to the 14% mark since the start of the year,

The head of the FED indicates that rates will rise beyond what the markets were anticipating, as the labor market remains 'tight' and household consumption 'robust', and even sustained.
Rates will therefore have to be maintained at a high level for a fairly long period... and it will also take time to bring inflation down to 2%, which remains the FED's objective.
But there is nothing really new in all this, which is reflected in the small variations on Wall Street: the Dow Jones is down -0.7%, the Nasdaq -0.5%, the S&P500 -0.8%.

A minor figure was released while J.Powell was answering questions from parliamentarians: US wholesale inventories fell by 0.4% in January 2023, to $929 billion (after an anecdotal rise of 0.1% in December), a destocking that seems to testify to persistent supply difficulties across the Atlantic.

Looking ahead to Friday's US employment report, the Federal Reserve will probably try to strike a balance between the progress made in slowing inflation, without job losses, and the need to continue raising rates as long as inflation risks remain on the upside", predict Danske Bank's staff.

With regard to the next FOMC meeting on March 22: bets on a 0.25Pts hike are in the majority (around 70%), but there are also 55% of experts betting on 4 rate hikes between now and the summer (including the March meeting), compared with just 2 rate hikes 5 weeks ago.

In Europe, German industrial order figures were released.

Against all expectations, German industrial orders rose in January, confirming the resilience of Europe's leading economy to the current slowdown in activity.

Following a 3.4% increase in December (revised from +3.2% previously), industrial orders rose by 1% on a seasonally adjusted basis, according to data from Destatis, the Federal Statistical Office.

On the fixed-income market, sovereign bond yields remain volatile: after Monday's "saloon door" session and a re-test of the year's worst levels at the end of the session, a small improvement is taking shape, with OATs easing -2.4pts to 3.200%, Bunds erasing -2.6pts to 2.700%, Italian BTPs on the other hand going from -7pts to 4.4700% to come back almost stable at 4.55%.

The US ten-year is easing by a marginal -1.5pts to 3.9670%, while the 2-year is 100pts higher at 4.962%.
On the currency front, the dollar is recovering slightly (+0.3%) to 1.0680/E, and oil is consolidating a little: -1.5% to $84.5 a barrel in London: its trend is no longer bearish, but it is not accelerating upwards either, while Saudi Arabia has just raised prices to Europe.

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