Pessimism Prevails

Time is running out for equity investors, with the S&P500 down almost 20% since its peak on January 3rd. Not enough for the Fed to deviate from its normalization path (190bp by the end of the year according to the OIS markets) if we take Jerome Powell at face value : the US will look at financial conditions though a broad approach which reflects the situation of American households as a whole. With the effects of inflation becoming evident on corporate earnings, the next few weeks should therefore remain complicated, as long as the actions of central banks do not clearly bear fruit in terms of reducing said inflation. Among the few glimmers of hope, the good performance of long sovereign bonds, and therefore a potential high point in terms of CB rate expectations.