In this issue, you will find Anis Bensaidani's editorial, as well as the update of our “EcoNews” and “Markets Overview” sections.
In the United States, growth is holding up, unemployment remains low and consumer spending shows no sign of slowing. On paper, that should flatter the president’s party ahead of the midterms. Yet, Republicans could lose control of Congress. The rise in the cost of living, which weighs on households far more than macroeconomic aggregates suggest, could be one of the reasons. On top of persistent inflation, rekindled by the war in Iran, there is also a slowdown in wage growth and rising housing costs. The election could hinge on affordability, yet whichever party wins will lack the means to address it. A change in the majority in Congress will nonetheless have an impact on the country’s economy.
Data releases confirmed resilient to strong growth and above-forecast inflation in most advanced economies, with France lagging behind and earning a rating outlook downgrade from Fitch as a result. Fed, ECB and BoJ remained on hold, as expected, and on track for December hikes. Oil continues to fluctuate between escalation fears and hopes for a return to the negotiating table. The tech sell-off in equity markets intensified despite strong earnings, as markets balk at large capex plans. This helped bond yields ease from recent highs.
Equity indices, currencies, commodities, bond markets. A deep selloff in tech stocks entered a third consecutive week, taking the Nasdaq down by 10% since its last peak. Europe outperformed and bonds rallied on investor demand for safety. The bund OAT spread is back to 164, however.
