Economists on average projected 57 points

Financial markets have an appointment today with the European Central Bank (ECB). But stakeholders were not yesterday felt the need to position themselves accordingly so the event has been prepared. Proposal institution should opt for a new increase in rates and thus wear rates in eurozone of 3 to 3.25. The market has already integrated the idea of a rate to 3.5 at year end and gives 65-70 of probability of the hypothesis of a screw to 3.75 early 2007 tour. The question is what will be the content of the speech of the President of the ECB accompanying this decision.

In the meantime, the euro remains in sentencing. Yesterday evening, it has exchanged 1,2695 dollar, withdrawal of 0.25 to his Tuesday evening course. The dollar seemed to him take advantage of the downturn in the price of oil, which is hoping that the landing of the US economy will be smooth while tempering fears of inflation on part and of the Atlantic. Black gold is spent yesterday in plenary under 58 dollars per barrel in New York and exchanged in London on the December 2005 levels. Since its high point of summer to 77,03 dollars, the price of oil has corrected 24.7.

"Jean-Claude Trichet should adopt a relatively firm tone, while the ECB seeks to reinforce the idea that monetary tightening is not finished," felt yesterday Barclays Capital team. The central banker could thus use the phrase "follow closely" inflation as the signal that the Central Bank is considering another increase 25 basis points in early December.

In particular, Barclays Capital suspicious that the ECB will simply are only weakly to the decline in the price to 1.8 in September. And this even if the decline continued in the course of oil gives hope nearest 1.7 in the month of October inflation 1.8, current estimate of the institution. Because "the ECB is aware that with an increase of 3 points of the German VAT in January, which should push inflation in euro area well above 2, it can hardly afford now to lower its guard from a rhetorical point of view".

ECB: end of cycle in early 2007

"The window of opportunity to remove the shopping aspect is still wide open, finds its Vincent Van Esch, at ING.". And we hope that these conditions will remain in place until the end of the year and the final movement to 3.75 in early 2007 is the most the ECB can achieve in this cycle. "Then, the window will close with the slowdown in eurozone, penalized by the weakening of the US economy, higher taxation in Germany and austerity in Italy". In the meantime, the economy expects no more see the institution down its guard side inflation, then the concerns with regard to possible effects of second rank of the prices of energy have not disappeared with the decline in the course of black gold.

The prospect of the meeting of the European Central Bank has not received attention on the side of State bonds. Between the decline in oil prices and the statistics of the day, stakeholders have found new reasons to fuel the trend towards relaxation of long rates. The rate of the French OAT to 10 years is so relaxed 4 basis points to 3,708, and the U.S. rate to 10 years in 4 points to 4,58.

The index PMI euro zone purchasing managers actually slightly disappointed. This indicator is 56.7 points in September, after 57.4 points in August. Economists on average projected 57 points. In the United States, it is the ISM services that created the surprise. Expected at 56 points, after 57 in August, the flag is actually 52.9 points. On the industrial controls, they remained unchanged in August.