CAC40: limits the damage after CPI at 3%, T-Bond takes 10pts

(CercleFinance.com) - The Paris Bourse, which had been hovering around the equilibrium point (8,025/8,030) since this morning, fell by -0.
3% to 8,000pts after the publication of the CPI (January price index), which had the effect of a cold shower, with gaps well above expectations.

The Euro-Stoxx50 fell by -0.4% to 5.370 and the 3 main US indices are expected to reopen down -0.8% to -0.9%.

This morning, the Euro-Stoxx50 set its 14th all-time record in 18 trading sessions at over 5,410pts, representing a 10.5% annual gain, outperforming the S&P500, which gained just 3% over the same period, and the Russell-2000 with just +2%.

The German DAX (-0.3%), which has already gained more than 10% this year, set its 16th record at 22,125 before the CPI was published.

The US consumer price index (+0.5% vs. +0.3% expected) provides spectacular confirmation of the persistence of US inflation, at a rate now exceeding 3%: the Fed could suspend the easing of its monetary policy until autumn (instead of July), or even the end of the year.

The consensus figure of 2.9% annualized for "global CPI" - the same as in December - was thwarted by a score of +3%, while "core CPI" - expected at 3.1% - came in at +3.3% (versus +3.2% in December), due to a +0.4% rise in January.

The inflation report is likely to be affected by Donald Trump's introduction of tariff surcharges on steel and aluminum, which will affect all exporting countries (the US auto industry is the main 'customer': their production costs will suffer).

As for the 25% surtaxes against Mexico and Canada, which could come into force on March 1, these 2 countries supply 44% of US food imports (worth $85 billion), and food accounts for 13.5% of CPI", point out Oddo BHF analysts.

Because of the new US President's interventionism on the trade front and its potentially inflationary effects, the evolution of monetary policy continues to preoccupy holders of US T-Bonds: the '10-yr' swerved +10.5pts to 4.643% and the '30-yr' (+8.5pts) blithely climbed back to 4.83%.

At his hearing before the Senate Banking Committee, the Fed boss noted that inflation had "significantly" eased over the past two years, but also admitted that it remained at relatively high levels.

Knowing that our approach today is less restrictive than before, and that economic activity remains solid, we don't need to rush to adjust our policy", he declared.

Jerome Powell is due to continue his hearings before US lawmakers today, but this time before the House Financial Services Committee.

Consumer price figures push the dollar up +0.35% to 1.0320/E

This morning, the markets had taken note of the latest monthly business survey published by the Banque de France (BdF). The BdF expects economic activity in France to grow slightly in the first quarter.

Based on the results of its survey, supplemented by other indicators, the institution estimates that growth in France should be between 0.1% and 0.2% over the first three months of the year.

On the European bond front, our OATs tightened by +3.1Pt to 3.188%, while Bunds gained +4.2Pts to 2.472%.

On the oil market, crude oil prices lost some ground after the technical rebound that began at the end of last week. Brent crude gave up 0.7% to $76.3 a barrel.

Gold continues to suffer from profit-taking after its series of absolute highs in recent sessions, dropping 0.9% to $2,875 an ounce after briefly breaching the $2,900 mark yesterday.
Rising inflation in the US (and in the G7 countries more generally) could push it back towards $3,000, but for the time being, the +10pt rise in T-Bond yields is hurting it.

In French company news, Carrefour announces its intention to acquire the shares held by minority shareholders in its Brazilian subsidiary, Grupo Carrefour Brasil, and to delist it from the São Paulo Stock Exchange through a share merger.

TotalEnergies and India's state-owned Gujarat State Petroleum Corporation Limited (GSPC) have announced the signing of a 10-year long-term sales agreement, starting in 2026. Under this agreement, TotalEnergies will deliver 400,000 tons or 6 cargoes per year of Liquefied Natural Gas (LNG) to GSPC.

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