• Negative stock markets, government bond yields fall and the dollar rises slightly. Investors await additional economic data and testimony from Jerome Powell before Congress, which could reinforce the message that the Fed is in no rush to cut rates.
• In China, the growth target for this year is set at around 5%. However, Premier Li Qiang acknowledged that there are challenges in achieving that. In addition, the central government announced the issuance of US$139 billion of very long-term bonds, which is speculated to be due to the financial problems of local governments.
• In the U.S., the focus will be on primaries in 15 states (with the exception of California and Texas) – known as Super Tuesday – in anticipation of the results confirming a rematch between Joe Biden and Donald Trump in the November 5 elections.
• In terms of economic data, the final PMIs for February in the Eurozone were slightly better than initially reported, although they still point to a complicated situation. In contrast, the revisions in the United Kingdom were downwards. In the US we will be keeping an eye on ISM services in conjunction with these indicators and January factory orders.
• On monetary terms, we await Barr's (federal vice chairman for oversight) comments in two different forums, Bostic (Atlanta) yesterday after recommending three rate cuts this year and Powell's appearance before Congress. Next two days
Stock market
• Negative movements in the tech sector with news affecting sentiment: (1) AMD (NASDAQ: ) stock price plunged 1.7% pre-market after it ran into a regulatory issue that would prevent it from selling AI chips to China; (2) Tesla (NASDAQ: ) trades lower (-2.0%) due to disappointing auto export numbers in China; and (3) Apple (NASDAQ: ) fell 2.1% due to weak sales in China at the start of the year
• In Asia, equity markets closed mixed. Markets fell in Europe, with the market down 0.1%. In the US, futures for major stock indexes pointed to a negative start, falling 0.3% on average
• In corporate reports, of the 2 S&P500 companies releasing their numbers today, Target (NYSE: ) (+8.3% pre-market) already posted better-than-expected results. Guidance was better than expected, although it points to moderate performance for the year
Government Fixed Income Market, Currencies and Commodities
• Positive balance in sovereign bonds. 10-year rates in Europe fell by an average of 3bp, while the Treasuries curve flattened slightly with gains of 3bp at the long end. Yesterday, M bonds lost an average of 4bp, and the 10-year benchmark ended at 9.22% (+5bp).
• AUD (-0.3%) slightly positive dollar advances against weaker most developed currencies. In EM, bias negatively leads to losses in TRY (-0.3%). MXN was at 16.97 (+0.1%) per dollar, extending the previous session's gains (+0.4%).
• Futures edge lower as macro concerns overshadow news that OPEC+ will extend production cuts for half a year. Metals mixed with a dynamic gain of 0.4%, decline of 0.2%.
Corporate Debt Market
• Fitch Ratings affirmed 'AAA(mex)vra' rating for ENCAPCB 21 / 21-2 issues. The outlook is stable. According to the agency, as of December 2023, the securitized portfolio presented no defaulted assets and was on par with what was seen in the agency's last review. However, Fitch analyzed the level of repossessed assets from day one and estimated the standard default rate, which gave a level of less than 1% and defined the base case of default as 6%.
• ENCAPCB 21 / 21-2 publications are supported by loan and lease agreements. The bonds have an aggregate principal amount of $4.5 billion (including reopenings) and are due to mature in May 2027. In addition to Fitch's rating, structured releases are rated 'HR AAA' by HR Ratings.
