Charles-Henry Monchau

Chief Investment Officer

Chart #1 — 

U.S. inflation figures reassure markets   

The good news of the week came from the U.S. inflation data. On a sequential basis, the general price index fell 0.1% in December, slightly more than consensus expectations. It was also the first time since May 2020 that the figure was down. On an annual basis, the price increase is 6.5%, the lowest level since October 2021. As shown in the chart below, the 3-month annualized inflation rate is decelerating sharply, including ex-housing services inflation. 

Note that other macroeconomic data this week (unemployment claims, consumer sentiment) indicate that the U.S. economy continues to do relatively well, despite the decline in the inflation rate. Overall, these figures reinforce the hope of a "soft landing" for the US economy.

U.S. 3-month annualized inflation rate - ex-housing services component is decelerating significantly

Picture1-2Source: Bloomberg

Chart #2 — 

S&P 500 recorded its best week since November 

U.S. inflation numbers and reassuring early corporate earnings helped equity markets post a second consecutive week of gains. The Nasdaq and growth sectors outperformed, led by a rebound in some technology mega-caps. The major U.S. investment banks (JPMorgan, Wells Fargo, Bank of America) reported better-than-expected Q4 earnings (although their outlook for the year is relatively conservative).

As the chart below shows, the S&P 500 closed just above its 200-day moving average. But the long-term negative trend line has yet to be broken. The entire 4000-4080 area remains an important resistance zone.

By closing at 3,999, the S&P 500 is approaching critical levels just above its 200-day moving average

Picture2-4Source: The Market Ear

Chart #3 — 

Last year's S&P 500 losers are this year's winners (and vice versa)   

Interestingly, the best performances at the beginning of the year are recorded by the stocks and sectors that suffered the most in 2022...This observation is valid for the stocks and sectors of the S&P 500 but also for the different asset classes. 

Who are the top performers of the year 2023? 

Picture3-2Source: Nomura

Chart #4 — 

Chinese stocks extend their "rally"

The CSI 300 Chinese stock index is now trading well above the long-term downtrend. It is also worth noting that the index broke the 200-day moving average on Friday.

Chinese stock index CSI 300 (in yellow) and the 200-day moving average (in purple)

Picture4-3Source: The Market Ear

Chart #5 — 

Bitcoin is up for 10 consecutive sessions

Bitcoin broke the $19,000 mark on Friday. This is its best week since October 2021. It is also noted that Bitcoin is now trading above its 200-day average. 

Bitcoin price since FTX

Picture5-2Source: Bloomberg, 

Chart #6 — 

Gold hit $1925 on Friday, its highest level since April 2022

Friday was the 6th consecutive day of gains for the yellow metal. It has appreciated 5% since the employment figures were published and is now trading at its highest level since April 2022. As a result of this rise, a "golden cross" has formed on the gold chart (the 50-day moving average has risen above the 200-day).

A “golden cross” on Gold

Picture6-2Source: Bloomberg, 

Chart #7 — 

The US yield curve continues to invert  

The release of U.S. inflation data helped U.S. Treasury yields to continue their downward trend. The 10-year yield touched a low of 3.43% during Friday's session. The inversion of the yield curve (3 months - 10 years) continues to increase, reflecting expectations of a recession in the US.  

3-month-10-year US Treasury yield curve

Picture7-2Source: Bloomberg, HolgerZ 



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