Weekly Reports

Weekly Markets Report

In the US, 177,000 new jobs were created in April, above the analysts' consensus forecast of 138,000 but below the previous month's revised figure, while the unemployment rate was in line with expectations at 4.2%. Meanwhile, Q1 gross domestic product (GDP) contracted at a -0.3% annualised pace when -0.2% was expected, the first contraction since 2022; while the March personal consumption expenditures (PCE) price index - the Fed's preferred inflation measure for monetary policy decisions - rose +2.6% y-o-y in the measure that excludes food and fuel (core), in line with analysts' consensus forecast. In this context, Treasury yields widened across the curve during the week, with the 1-year bond closing at 4.0% and the 10-year at 4.31%. This week, the focus will be on the Fed's monetary policy decision, where the benchmark rate is expected to remain unchanged at 4.5%. This environment results in higher nominal yields today compared to those that could be obtained in the coming months for investment grade bonds, where it seems more convenient to position in tranches shorter than 5 years due to their lower sensitivity to changes in the outlook for the interest rate path.

 

 

 

 

Weekly Monitor

International

The week's focus in the US will continue on the political and economic front, with the Fed's monetary policy meeting expected to leave the benchmark rate unchanged at the current 4.25%-4.50% range, while the Q1 corporate earnings season will continue. In Europe, March retail sales -a proxy indicator of activity- will be released, estimated at +1.6% y-o-y, while the Bank of England will meet to decide on the interest rate, which is expected to be cut to 4.25% from the current 4.5%. In Latin America, there will also be a meeting of the Central Bank of Brazil, for which a hike of half a percentage point in the reference rate to 14.75% is expected, while April inflation in Brazil, Mexico and Chile will be released.

In the United States, 177,000 new jobs were created in April, above the 138,000 estimated by the analysts' consensus but below the revised 185,000 in March. Meanwhile, the unemployment rate remained at 4.2%, in line with expectations.

In the United States, 177,000 new jobs were created in April, above the 138,000 estimated by the analysts' consensus but below the revised 185,000 in March. Meanwhile, the unemployment rate remained at 4.2%, in line with expectations. Meanwhile, in the US, Q1 GDP contracted at a -0.3% annualised pace versus -0.2% expected, in contrast to Q4 (+2.4%) and representing the first contraction since Q1 2022. Meanwhile, March PCE inflation -the Fed's benchmark for monetary policy decisions- was unchanged month-on-month at +2.3% y-o-y, slightly higher than +2.2% expected; while the measure excluding food and fuels was also unchanged month-on-month but rose +2.6% y-o-y, in line with expectations.

 
In this context, US Treasury yields widened across the curve during the week. The 1-year bond rose from 3.94% to 4.0%, the 3-year from 3.74% to 3.81% and the 10-year from 4.24% to 4.31%. Investment grade corporate bonds (ETF LQD) had an average yield of 5.7%. Elsewhere, equity indices closed higher, with the Nasdaq leading the way with a +3.4% gain.

With the Q1 corporate earnings season well underway, 72% of S&P 500 companies have reported their balance sheets, of which 76% beat earnings per share (EPS) expectations and 62% beat revenue expectations. In the previous week, Apple, Amazon, Microsoft, Meta Platforms, Novartis, Visa reported EPS and revenues above projections, while Coca-Cola only beat EPS but not revenues. McDonald's, Starbucks and Caterpillar reported lower than expected EPS and revenues.

In the Eurozone, Q1 GDP came in above expectations, posting a +1.2% y/y and +0.4% q/q increase versus expectations of +1.1% and +0.2% respectively. Against this backdrop, the EuroStoxx 50 index ended the week +2.5% higher.

Weekly Markets Report

In the US, the main equity indices ended the week positive, with the Nasdaq leading the trend with +6.7%, followed by the S&P 500 with +4.4%, after Donald Trump moderated the tone of his comments on the monetary policy conducted by Jerome Powell, chairman of the Federal Reserve (Fed), and regarding tariffs against China. This week, the focus will continue to be on the political and economic agenda, with the release of March PCE inflation - the Fed's benchmark for monetary policy decisions -, April labour market developments and the first estimate of Q1 Gross Domestic Product (GDP). Against this backdrop, Treasury yields compressed across the curve during the week, with the 1-year bond closing at 3.95% and the 10-year at 4.26%. The Fed is expected to make between 2 and 3 quarter percentage point cuts in the benchmark rate (currently at 4.5%), in the face of an eventual weakening of the labour market that could result from a further slowdown in economic activity. This environment results in higher nominal yields today compared to those that could be obtained in the coming months for investment grade bonds, where it seems more convenient to be positioned in tranches shorter than 5 years because of their lower sensitivity to changes in the outlook for the interest rate path.

 

 

 

Weekly Monitor

International

The week's focus in the US will continue to be on the political and economic agenda, as the personal consumption expenditures (PCE) price index -the Fed's preferred inflation measure for monetary policy decisions- for March will be published, with year-on-year increases of +2.2% and +2.6% in the measure that excludes food and fuel (core). At the same time, the labour market will be released in April, with unemployment projected at 4.2% and the creation of 125 thousand new jobs, and the 1st estimate of the 1st quarter GDP, for which an annualised +0.3% is expected. In the Eurozone, Q1 GDP will also be released, expected at +1.1% y-o-y; while in Japan, there will be a monetary policy meeting, expected to leave the benchmark rate unchanged at the current 0.5%. In Latin America, Mexico will release its Q1 GDP, and in Chile the interest rate decision will take place, which is at 5%.

After Donald Trump moderated his rhetoric on Fed Chair Powell's monetary policy actions and potential tariffs against China, equity indices closed the week higher, with the Nasdaq up +6.7%, followed by the S&P 500 at +4.4%. US Treasury yields compressed across the curve during the week, with the 1 year bond moving from 3.96% to 3.95%, the 3 year from 3.8% to 3.75% and the 10 year from 4.32% to 4.26%. Meanwhile, Investment Grade corporate bonds (LQD ETFs) averaged a yield of 5.6%.

At the start of the Q1 2025 corporate balance sheet season, Alphabet, AbbVie, Verizon, Lockheed Martin, IBM and T-Mobile US reported earnings per share (EPS) and revenue above expectations, while AT&T and Colgate-Palmolive only beat revenue projections but not EPS. Tesla and Procter & Gamble reported EPS and revenue below expectations. Microsoft, Meta Platforms, Apple, Amazon, Caterpillar, Coca-Cola, Mastercard, McDonald's, Visa, Novartis, among the major companies, will release results this week.

In the US, the S&P Global Manufacturing Purchasing Managers' Index (PMI) came in at 50.7 in April, above the 49-point estimate and the March reading. Meanwhile, the services sector PMI came in at 51.4, below expectations (52.8). It is worth noting that it represents a leading indicator of activity, and a figure above 50 points implies expansion, while one below contraction of activity.

Regarding the performance of Latin American sovereign debt, 10-year dollar bond yields in Brazil and Mexico moved from 6.78% and 6.42% at the beginning of the previous week to the current level of 6.50% and 6.17%, respectively.