Last week, central bankers took advantage of the mild climate in Sintra, Portugal, to attend the ECB's annual forum. If you were expecting some inflexion on current monetary policy, you were certainly disappointed. Christine Lagarde reiterated her firm stance to bring inflation down to around 2% by the end of 2025. Her American peer, Jerome Powell, said pretty much the same thing, and is not ruling out further tightening of the screws as early as the next meeting in July. However, even the IMF, through its Deputy Managing Director Gina Gopinath, finds the objective somewhat questionable, given that "there is no historical precedent for such a fall in inflation [...] without causing a severe recession. "

At least we've been warned. In the meantime, equity markets seem to be adjusting to this new environment, especially as things aren't all that bad. Bloomberg has published an economic surprise indicator for the US zone. And it has to be said that the pessimism of economists is not borne out by macroeconomic statistics!

(Source: Bloomberg)
Note the similarity between the performance of the US stock market's flagship index, the S&P 500, and this indicator. At the same time, the bullish wave seems to be becoming contagious, as evidenced by the fact that small caps outperformed the S&P 500 in June. Assuming that inflation has now stabilized, even if it remains well below the 2% target, investors prefer to focus on consumer spending figures. Although consumer spending dipped to 0.1% in May from +0.6% in April, American consumers are continuing to draw on the savings accumulated during the COVID period to offset the effects of rising prices. Will this ensure a trouble-free summer?