In the US, April inflation slowed to +3.4% y/y, compressing Treasury bond yields
International
In the United States, the April consumer price index was slightly lower than in March by all measures. Specifically, it registered +0.3% monthly versus +0.4% expected, and +3.4% year-on-year, in line with expectations. Meanwhile, inflation excluding food and fuel rose +0.3% monthly and +3.6% year-on-year, in line with expectations.
In this context, the Treasury bond yield curve compressed across all maturities. The yield on the 1-year bond closed at 5.09% and the 3-year bond at 4.51%; while the yield on the 10-year bond fell to 4.35%. It is worth noting that the Federal Reserve (Fed) rate futures project the first 25 basis point cut for September, with a 64% probability.
The main US stock indexes ended the trading session with widespread gains, led by the Nasdaq with +1.4%, followed by the S&P 500 with +1.2% and the Dow Jones with +0.9%. Consequently, in the year-to-date they show increases of +11.5%, +11.3% and +5.9% respectively.
Latam
Brazil's economic activity declined -2.2% year-on-year in March, impacting the Bovespa
In Brazil, economic activity in March contracted -0.3% monthly, in line with expectations, reversing the upward trend of the last 4 months; and -2.2% year-over-year. However, for the year it shows an expansion of +1% compared to the same period of 2023.
Regarding the performance of Latin American stocks, the trend was mixed at the end of yesterday's trading session. Thus, the main increases were observed in Peru's stock market with +0.5%, and in Mexico's IPC with +0.4%; meanwhile, Brazil's Bovespa declined -0.2%.
In Colombia, the Gross Domestic Product (GDP) for the first quarter was below expectations, with an increase of +0.7% year-on-year and +1.1% quarter-on-quarter, compared to estimates of +0.8% and +2.1%, respectively. However, it is worth noting that both performances exceeded the records of the 4th quarter of 2023.
All eyes are on the April inflation figure for the US, expected at +0.4% month-on-month
International
In the run-up to the US April inflation data to be released today (consumer price index or CPI), yesterday's producer price index (PPI) result closed at +0.5% month-on-month in April and +2.2%, beating analysts' consensus estimate of +0.3% month-on-month and in line with the year-on-year estimate. For today's CPI data, an increase of +0.4% month-on-month and +3.4% year-on-year is expected.
The data will be key for the short-term evolution of U.S. Treasury yields, and for the rest of dollar fixed income. An increase in bond yields would be expected if the inflation figure closes higher than expected, and vice versa.
Meanwhile, the main U.S. equity indices posted gains, with the S&P 500, Dow Jones and Nasdaq up +0.5%, +0.3% and +0.8% respectively. Treasury yields closed at 5.2% for the 1-year maturity, 4.6% for the 3-year maturity and 4.4% for the 10-year maturity.
Latam
Analysts' consensus forecasts a -2% year-over-year decline in March activity in Brazil
During the day, Brazil will announce the evolution of economic activity in March. According to analysts' consensus estimates, a contraction of -0.25% monthly and -2% year-on-year is expected, which, if confirmed, would contrast with the positive performance registered during February.
Latin American stock markets traded mostly higher during yesterday's trading, with the exception of Mexico, which fell -0.9%. In this sense, Colombia's stock market stood out, with +0.9%, followed by Chile's IPSA and Peru's stock market, with +0.6% in each case.
