ECB to raise rates for first time since 2011, watch tomorrow

This has not happened since 2011! The European Central Bank (ECB) will raise key rates. It remains to be seen how much: 25 basis points? 50 basis points? Neither scenario seems to be out of the question. The institution must find the right balance between increasing the cost of credit to calm the price surge, while avoiding worsening the situation in the most vulnerable countries, in particular in Southern Europe. Several central banks elsewhere in the world did not hesitate to strike hard, such as the Bank of Canada, which raised the value of money by 100 basis points. Next week, the US Federal Reserve (Fed) may raise rates by 75 basis points for the second time in two months.

A more detailed rate hike schedule?

The Governing Council is well aware that the rate hike will not have a direct impact on energy prices, but it wants to anchor medium-term inflation expectations at around 2%, explains Oddo BHF. ECB President Christine Lagarde laid the groundwork for the first increase of 25 bps. in July, then by 50 bp. in September. The rest is more uncertain at this stage. “. The consequences to be feared will be an economic recession. So markets will be attentive to Christine Lagarde’s details on the continuation of the rate hike cycle.

In addition, the institution is expected to use the anti-fragmentation tool, while the difference in rates between the countries of the eurozone increased the cost of debt for the countries of the South (Italy, Greece) faster than for the countries of the North (Germany, the Netherlands). In this regard, Generali Investments shares its concern, as the risk is that the instrument ” does not meet the high expectations of the market. In this case, peripheral debt may come under pressure “.

Until the resumption of the Northern Stream-1 gas pipeline.

At the height of the geopolitical crisis with Russia, the European Union fears that the Kremlin and Gazprom, controlled by it, will not open the Nord Stream 1 gas pipeline, which has been under repair since July 11. A situation that will plunge the Old Continent into an energy crisis, even if, according to Reuters, gas supplies should resume on Thursday, but at a slower pace. Uncertainty of supply will burden July business climate in Franceexpected to drop to 103 (compared to 104 in June).

In the Pacific, the operators will follow them meeting of the Bank of Japan, while the yen is at its lowest level against the dollar since 1998. The Japanese currency suffers from the lack of attractiveness of Japan’s key rates, which remain very low, while the global trend is towards tightening monetary policy. In the United States, the labor market should remain dynamic, new weekly jobless claims last week is expected to decline to 240,000 from 244,000 the previous week. Investors will also analyze in the afternoon index of activity of the Federal Reserve System of Philadelphia for July and Conference Board leading indicators for the month of June.

Thales and Publicis at the front

As for securities, the publication of results is ongoing. Two values ​​of Cac 40 will be on the grill: Thales and Publicis. Europe’s security leader should benefit from the recovery of aeronautics and defense. For Publicis, the second quarter should be solid, albeit slightly slower due to a challenging base comparison effect. In addition to the flagship index, the household appliances group self could benefit from a return to operations in China. Operators will also analyze the half-year GL Events and Covivio. at the international level, nokia and Philip Morris will announce the results for the second quarter.