Report
The markets still convinced about the slowdown of inflation, the data less so
Unfortunately, the slowdown in US economic growth in Q1 2023 (long awaited by the Fed) does not seem result from the restrictive monetary policy. Indeed, large part of this deceleration comes from the slowing in inventories and lower productive investment (with margins going down due to the decreased productivity) while household consumption has accelerated. However, the markets still seem complacent and rely more on the new concerns about the US regional banks (with strong exposure to commercial real estate) allowing to price the first Fed Funds rate cut before the year-end. Next week’s crucial Fed and ECB meetings are expected to provide more information on central bankers' intentions to slow or halt the cycle of monetary tightening. Besides, we will closely monitor some economic activity indicators, notably the US NFP employment report .
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Natixis
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