In the US, after the banking storm, markets picked up, closing strongly in positive territory, erasing the February losses. The US job market is still strong and remains the main driver of growth, but if it is any indication of what is to come, management calls with investors mentioned, for the first time in a while, more often the terms “job cuts” than “labor shortage”.

The month actually started on a strong note, in continuation to January, but then came the very good US job data. The good figures indeed are synonymous with strong consumption, but the Fed is trying to slow down demand in order to keep inflation under control. It would prefer a recession than a spiraling inflation.

At the end of 2022, there were two consensuses on Wall Street: the US will have a soft/medium recession and the certainty that Europe will have a much harder recession. Fast forward one month and nothing is certain anymore.

In December, central bank hawkishness continued, despite some softening economic data. The significant tightening of monetary policy in 2022, along with other macroeconomic factors, such as the Russia-Ukraine war, has had a large impact on financial markets.

Prospects of cooling inflation in the US has led investors to anticipate the potential that the Fed will raise rates by 50bps at its December meeting.

Typically, decreasing interest rates is positive for equities, and the S&P 500 index finished above the 4,000 level for the first time in two months on November 22nd.