Morning View

Yield on the 10-year U.S. Treasury note climbs to 4.79%, a 16-year high

International

U.S. Treasury bond yields continued with an upward trend across all maturities yesterday, especially in the longest tranches, after members of the Federal Reserve ratified the restrictive monetary policy for a longer time than expected. Thus, the 1-year bond closed at 5.49%, the 3-year bond reached 4.95%, while the 10-year bond climbed to 4.79%, remaining at 16-year highs.

In this context, the main stock indexes in the United States ended yesterday's trading session with declines due to the uncertainty caused by the increase in US bond yields. Thus, the Nasdaq fell -1.9%, the S&P 500 -1.4% and the Dow Jones -1.3%. So far this year, the first two indices have accumulated improvements of +24.8% and +10.2%, respectively, while the last one shows a decline of -0.4%.

In the United States, the August JOLTs job openings survey showed a significant increase over the previous month, exceeding the market estimate of 8.8 million. Specifically, job openings came in at 9.6 million, a three-month high.

The focus of the day will be on the release of the ADP national employment survey in the United States, with private payrolls expected to come in at 160 thousand in September. Meanwhile, in the Eurozone, the evolution of retail sales and wholesale inflation for August will be released.

 

Latam

Latin American stock markets fell during yesterday's trading session

Latin American stock markets fell yesterday. In first place, Mexico contracted -1.7%, followed by Brazil with -1.5%. In addition, the Chilean stock market fell by -1.2%, followed by the Colombian stock market with -0.9%.

Yesterday, October 3rd, Brazil published August industrial production, which registered +0.5% annualized and was below market estimates (+0.8%). The monthly change was +0.4%, also below expectations (+0.5%).

In Argentina, the S&P Merval rose +0.9%, where the basic materials sector stood out with an average increase of +3.4%. However, following the +3.9% rise in the implied bond exchange rate to $836, the index measured in dollars stood out negatively within the region and recorded a -2.9% decline.

1-year U.S. Treasury bond closes at 5.49% on better-than-expected activity data

International

U.S. Treasury bond yields traded with increases across all maturities during yesterday's trading session, following better-than-expected activity data. Thus, the 1-year bond closed at 5.49%, the 3-year bond reached 4.89%, while the 10-year bond ended at 4.69%, remaining at 16-year highs.

In the United States, the manufacturing Purchasing Managers' Index (PMI) measured by the Markit agency stood at 49.8 points in September. This result reflects an improvement compared to the preliminary and projected figure of 48.9 points, and is the highest level in the last 5 months. It is worth noting that a performance above 50 points implies expansion, and a performance below 50 points implies contraction of activity.

The main stock indexes in the United States started the week with mixed performance, awaiting the release of the September employment data at the end of the week. Thus, the Nasdaq advanced +0.7%, the S&P 500 remained practically unchanged, while the Dow Jones declined -0.2%. So far this year, the indices have accumulated increases of +27.1%, +11.7% and +0.9%, respectively.

In the Eurozone, the manufacturing PMI for September was 43.4 points, in line with expectations but slightly lower than in August. Meanwhile, the unemployment rate remained at 6.4% in August for the third consecutive month. Thus, the EuroStoxx 50 fell -0.9% at the close of the day.

 

Latam

In Chile, the Monthly Index of Economic Activity presented a deceleration of -0.9%

Latin American stock markets opened the week with declines. In Peru, the stock market fell -1.6%, followed by Chile, which contracted -1.3%. The exception was the Mexican stock market, which rose +0.8% yesterday. 

Yesterday, October 2, in Chile, the Monthly Index of Economic Activity was published, which registered a deceleration of -0.9% and was below market expectations (+0.1%). 

Today, in Brazil, the Industrial Production for August will be released and is expected to be +1.0% YoY. 

In Argentina, bonds continued to decline following the trend of global bonds after the widening of US Treasury yields and after the first presidential debate. Sovereign bonds fell on average -2%, where the largest declines were observed in AL29 and GD46, dropping -6% and -2.2%, respectively.