The week to come in 5 points. What is about to happen in the markets?

The markets are preparing for another week full of ideas, after the central bank meetings which have monopolized attention and offered new indications for 2024 which is now upon us.
Investors are already focused on at least 5 crucial themes, which can shake stock, bond and currency markets in the coming days.
Wall Street's euphoria over the announcement of Fed rate cuts starting from 2024 – without precise clues about the dates – is balanced with the prudence of the ECB, which did not discuss the issue of decreasing the cost of money at all in the meeting of December.
Any new macroeconomic data on the United States and the Eurozone and its individual member countries will be scoured by analysts, politicians and traders.
The specter of recession and the risk of consumer prices rising again make optimism for 2024 still fragile.
Furthermore, Japan's monetary policy, which has so far gone against the trend, could soon change, leaving repercussions on the global financial market.
The focus of next week's markets is on 5 key themes.
Japan, end of negative rates? Speculation that the Bank of Japan (BOJ) may soon exit negative interest rates is increasingly widespread.
The potential monetary policy shift would once again be a global anomaly, as the markets' focus is now on when the Fed will start cutting its rates.
A change in approach probably won't come with the policy decision on Tuesday, December 19, but the BOJ will meet again in January and next week could be crucial in paving the way for a historic tightening in the cost of borrowing.
This expected turnaround, combined with the Fed's dovish stance, pushed the yen back towards the stronger level of 141 per dollar for the first time since July.
US data in focus One of the most anticipated data for next week is the US personal consumption expenditure (PCE) price index, which the Fed monitors very carefully.
Investors hope this indicator shows an easing of pressure on consumer prices, after the Fed signaled the end of its campaign of interest rate increases and likely cuts in the cost of money coming in 2024.
A stronger reading than predicted could in fact ruin the optimistic sentiment on Wall Street and cast new shadows on the real possibility of an accommodating monetary policy.
Maximum attention is paid to data on consumer confidence, with investors trying to assess how much higher interest rates are weighing on spending.
Whether the Fed has been able to engineer a soft landing for the US economy is a key market theme as the calendar turns to 2024.
Where is Europe going? The caution expressed by the ECB on inflation, economic growth and the future of interest rates in the Eurozone has become a sign of strong uncertainty about the future of the region.
The latest preliminary data on PMIs on Friday 15 December brought the theme of recession back to the foreground, which is now increasingly a probable scenario for the end of 2023.
With Germany leading the fragility of all of Europe and weakening the prospects of a short-term revival of European industry, 2024 does not seem to start with the best auspices.
The ECB also worsened its GDP estimates in its projections updated in December.
read also ECB, when will there be the first rate cut? In this context, final Eurozone inflation data and German confidence and sentiment indicators next week are awaited by investors.
How bright can gold shine? Gold is heading for its first annual rise since 2020, fueled by a weaker dollar and the belief that interest rates and inflation will decline quickly in 2024.
The precious metal, which produces no interest, tends to gain better results in a context of falling real rates, those adjusted for inflation.
Real US 10-year yields have been rising steadily since the start of 2022, but only turned positive in June, sending gold tumbling from a near-record high.
They are now at their highest level in eight years, but that hasn't been a barrier to gold moving past $2,000 an ounce.
Yet the price is still about 20% below its inflation-adjusted all-time high of above $2,500 in 1980.
Investors are betting on a massive round of rate cuts next year, but political uncertainty and rising economy could be the real weak point for gold investors (in contexts of insecurity the dollar as a safe haven attracts comparators, to the detriment of the metal).
read also Why invest in gold in 2024? Forecasts and targets 5.
Attention to Egypt In a particularly vulnerable historical context due to geopolitical issues, investors are also observing the events in Egypt.
Egyptian President Abdel Fattah al-Sisi's third consecutive election victory is expected to be officially confirmed on Monday 18 December.
The challenges of the new mandate are very insidious and concern an area of the world that is more in crisis than ever today.
The war in Gaza is more dramatic every day, right on Egypt's doorstep and could involve Cairo with the arrival of Palestinian refugees.
The nation is also mired in an economic crisis fueled by near-record inflation and waves of unpaid loans, with debt interest payments alone taking up nearly half of government revenue.
Economists say the debt is unsustainable.
In 2024, Egypt must pay at least $42.26 billion in interest, including $4.89 billion to the International Monetary Fund.
The first move after the election looks set to be another major currency devaluation.
The Egyptian pound has already halved against the dollar since March 2022.
One dollar is now worth around 49 Egyptian pounds on the black market against an official rate of 31 pounds.
Frustration over economic insecurity could lead to social unrest.

Author: Hermes A.I.

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