The Paris Bourse has posted a 4th consecutive session of declines (-0.6 to -0.7%) against a backdrop of rising bond yields, which stagnated at their zenith on Tuesday, in the absence of any 'macro' data likely to push it lower.
The CAC40's dip below 7,130, then 7.100 should be enough to validate the start of a consolidation phase, barring a providential rebound by 5.35pm.
Wall Street's negative reopening, with -0.8% on the S&P500 and -1% on the Nasdaq, won't help between now and the close.
Investors are beginning to accept the possibility of 'higher rates for longer' from the US Federal Reserve.
Optimism about a 'soft landing' scenario for growth, which until recently carried the markets, has given way to a bout of caution in view of soaring government bond yields in the wake of rising inflation expectations.
The other worry is the FED's unprecedented issuance program of $1.000bn/month: capital will have to be attracted with increasingly generous yields.

As a result, the yield on 10-year Treasuries yesterday hit a new high since 2007 above 4.56% (4.5400% at 3.45pm), a phenomenon that is not sparing Europe, since the yield on the 10-year German Bund is close to 2.80% (2.789%, unchanged on Tuesday).

Market participants fear that this feverish rise could push the US 10-year yield towards the 5% threshold, a level considered critical.

On the currency front, the dollar continues to appreciate against the euro, which yesterday shattered its recent low of 1.0640 to sink to 1.0590, its lowest level since last March.

As a sign of the anxiety in European equity markets, the index measuring implied volatility on the Euro STOXX 50 index jumped by over 12% yesterday, with the VIX associated with the S&P500 now testing 18..

Nervousness is further fuelled by the spectre of a partial shutdown of the US federal government as early as October 1, following the recent blocking of a defense spending bill by elected Republicans.

Despite this difficult environment, the US equity markets are not giving in to panic for the time being, as evidenced by the symbolic gains posted by Wall Street on Monday.

Buoyed by the strength of oil stocks, the Dow Jones gained just over 0.1% yesterday, while the Nasdaq gained almost 0.5%, supported by the stocks most exposed to artificial intelligence following Amazon's announcement of a strategic collaboration with Anthropic, an AI start-up.

Against this backdrop of economic uncertainty, investors will be keeping a close eye on the Conference Board's new home sales and consumer confidence figures in the United States this afternoon.

In the coming days, they will also be watching a battery of indicators, including new inflation data for the euro zone and the United States.

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