Morning View


U.S. Treasury yields continue to fall after lower-than-expected wholesale inflation in May


The U.S. Treasury bond yield curve showed declines across all maturities at the close of trading yesterday, following the release of certain economic indicators. Thus, the 1-year bond yield ended at 5.06%, the 3-year at 4.43% and the 10-year yield fell to 4.24%.

In this sense, wholesale prices in May were lower than retail prices, registering -0.2% monthly and +2.2% year-on-year, below expectations (+0.1% and +2.5%, respectively). At the same time, last week's new jobless claims totaled 242 thousand, above the previous result and above the analysts' consensus estimate (225 thousand).
For their part, the main US stock indexes mostly advanced, with the Nasdaq and the S&P 500 at all-time highs. Specifically, they recorded +0.3% and +0.2% in each case, while the Dow Jones fell -0.2%. It is worth noting that during the year they showed increases of +17.7%, +13.9% and +2.5%, respectively.

In the Eurozone, April industrial production contracted -0.1% month-on-month, reversing the positive performance of the last 2 months; and -3% year-on-year. It is important to mention that projections were +0.1% and -1.9%, respectively. In this context, the EuroStoxx 50 stock index declined -2% during the trading session.



Retail sales in Brazil grew +2.2% year-on-year, below analysts' expectations of +3.9%

Retail sales (consumer measure) in Brazil increased +2.2% y-o-y in April 2024, below analysts' expectations of +3.9% and March's increase of +5.7%. On the other hand, on a monthly basis, retail sales increased +0.9% after posting a +0.3% increase in the previous month. Fuels (+2.2%) and food and beverages (+1.5%) were the main drivers of the increase. 

Most Latin American countries' main markets closed the day down. Mexico's stock index stood out with a -1.3% drop, followed by Peru with -1.1%. The exception was the Colombian market, with an increase of +0.4%.


US inflation slows in May as Fed keeps benchmark rate at 5.5% in May


The US Federal Reserve (Fed) kept the reference rate at the current range of 5.25%-5.50%, in line with expectations. The Fed confirmed that although modest progress has been made in terms of inflation, it is insufficient to achieve the necessary confidence to initiate the cycle of rate cuts, given that activity continues to show resilience. Consequently, Fed rate futures estimate between 1 and 2 rate cuts in 2024, with a first adjustment in November. For its part, the monetary authority foresees less monetary easing, estimating 1 cut of a quarter of a percentage point compared to the 3 projected at the beginning of the year, which would leave it in the range of 5%-5.25%.

Meanwhile, inflation in May slowed down compared to April and was below expectations in all measurements. Specifically, it remained unchanged at the monthly level and advanced +3.3% year-on-year, compared to estimates of +0.1% and +3.4%, respectively; while the measurement that excludes food and fuels registered +0.2% monthly and +3.4% year-on-year, when +0.3% and +3.5% were projected in each case. 

In this context, the main equity indices exhibited increases for the most part, with the Nasdaq and the S&P 500 returning to record highs for the day, after marking +1.5% and +0.9% in each case, while the Dow Jones declined -0.1%. Meanwhile, U.S. Treasury bond yields compressed across the curve at the close of trading yesterday. Thus, the 1-year bond yield closed at 5.12%, the 3-year at 4.50% and the 10-year yield fell to 4.32%.

According to the quarterly update of the Federal Open Market Committee's macroeconomic projections, the growth forecast for 2024 is maintained at +2.1% annualized, and unemployment at 4%, figures that for next year would be +2% and 4.2%, respectively. However, in terms of inflation, a slight upward correction is observed for the current year, with year-on-year marks of +2.6% and +2.8% expected in the measurement that excludes food and fuel; while for 2025, +2.3% is forecast for both measurements. 


Inflation in Colombia was +7.2% year-on-year in May, lowest since January 2022

The year-on-year inflation rate in Colombia reached +7.2% in May, unchanged from the previous month's figure, and in line with market estimates. In that sense, it remained the lowest since January 2022. On a monthly basis, consumer prices increased +0.4%, down from April's figure of +0.6% and the lowest estimate in seven months. On the other hand, 
The stock indices of the main Latin American countries showed mostly downward results. On the one hand, Brazil's market stood out with a -1.4% drop, accumulating a -10.6% decline in the year. In the same direction were Colombia and Mexico, with declines of -0.5% and 0.3% in each case. On the other hand, Peru ended the trading session with a +1.0% increase, reaching a +14.3% rise for the year. 

During the day, Brazil's retail sales data for April will be published, which showed a +5.7% y-o-y increase in March; market analysts estimate a +3.9% increase for April.

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