The paradox of monetary injections: when the U.S. economy gets better, the stock markets fear a correction

The Tokyo Stock Exchange has just landed (-5.15%) for the second time in a week and volatility is back on the equity markets. Investors and traders will have to learn to take advantage of these erratic movements. Above all, they will have to accommodate a scheduled dose reduction of liquidity injected by the U.S. Federal Reserve


The market situation is also more paradoxical: while the U.S. economy is regaining its full breath (consumer confidence at the highest in five years, expected improvement in the housing market by the end of the year), that companies perform well, the high points of U.S. stock indices are threatened by the expected withdrawal of the ultra-loose monetary policy of the Fed.


In the wake of Wall Street, it's all world stock markets fearing a mechanical correction inconsistent with the U.S. economic sense. To believe that weaning monetary measures (type "artificial") will be equally difficult to understand for investors, that was decisive quantitative easing in the market rally. Why such a movement of aversion? Because a monetary tightening, even progressive in the coming quarters, between rate hikes and cuts in purchases of fixed income promote a legitimate raising borrowing rates and reduce the attractiveness of that action. With a little more profitable sovereign bond yields, many investors would return to this asset class at the expense of equity markets, which until now no longer suffer from any competition in terms of performance. Moreover, even before any formal announcement on the "timing" of monetary tightening, the anticipation of such a scenario has led to the rise of the U.S. 10-year yields, now more than 2.1%, the highest point in more year.


In this uncertain environment, investors now tend to be rather "sellers" on the U.S. indices, in favor of Japanese indices (Nikkei) and European (CAC 40 and IBEX). Regarding the first, the early termination of higher incentive to profit taking. On the latter, on the contrary, the consolidation already visible in recent sessions that encourages some shopping cheap.

Another notable movement, a renewed interest in gold, which refranchit the symbolic threshold of 1 400 USD. The safe haven it find patterns in inflation rising U.S. interest rates combined with reflux hypothetical equity assets?