ECB to raise rates for the first time since 2011, see tomorrow

This hasn’t happened since 2011! The European Central Bank (ECB) will raise its key rate. It remains to be seen to what extent: 25 basis points? 50 basis points? No scenario seems to be out of the question. The institution needs to strike the right balance between the rise in the cost of credit in order to calm the rise in prices while avoiding worsening the situation in the most vulnerable countries, in particular those in southern Europe. Elsewhere in the world, several central banks 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 certain rate hike schedule?

The Board of Governors is well aware that the rate hike will not have a direct impact on energy prices, but wants to fix medium-term inflation expectations at around 2%, explains Oddo BHF. ECB President Christine Lagarde set the stage for a first rise of 25 basis points in July, followed by 50 basis points in September. The rest is more uncertain at this stage. The consequences to be feared would be an economic downturn. As such, markets will be closely watching Christine Lagarde’s details about the continuation of the rate hike cycle.

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

On the way to the opening of the Nord Stream 1 gas pipeline

In the midst of a geopolitical crisis with Russia, the European Union fears that the Kremlin and Gazprom, which it controls, will not reopen the Nord Stream 1 gas pipeline, which has been under maintenance 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. Supply uncertainty will weigh on business climate in July in Franceexpected decline to 103 (against 104 in June).

In the Pacific, operators will follow Bank of Japan meeting, while the yen is at its lowest level against the dollar since 1998. The Japanese currency is suffering from the unattractiveness of Japanese key rates, which remain very low, while the global trend is to tighten monetary policy. In the US, the labor market must 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 Philadelphia Federal Reserve Activity Index for July and Conference Board Leading Indicators for the month of June.

Thales and Publicis on the front line

For securities, the publication of results continues. Two values ​​of Cac 40 will be on the grill: Thales as well as Publicis. The leader of European security should benefit from the recovery in aeronautics and defense. As far as Publicis is concerned, the second quarter should be solid, albeit a little slower due to the complex baseline effect. In addition to the flagship index, the home appliance group Seb could benefit from a recovery in activity in China. Operators will also analyze semi-annual GL Developments as well as Covivio. On the international level, nokia as well as Philip Morris will publish second quarter results.