2023-05-26 18:26:05
US policy has marked the evolution of world financial markets this week. The tense negotiations between Republicans and Democrats to raise the debt ceiling (and thus avoid falling into default) have unleashed a small earthquake in the fixed income markets, where each day that has passed without an agreement, investors demanded a little more to buy country debt.
Bills with shorter maturities are the ones that have felt the most pressure. For example, at six months, yields have shot up to 6.8%. To get an idea, at the beginning of the year the figure was around 4.5%. In other words, investors are now demanding much more for the same bonds.
The European stock markets have also suffered from volatility during a week that has gone from less to more, with strong rises on Friday due to rumors that pointed to an imminent pact on the other side of the Atlantic.
The Ibex-35 advanced 0.82% which, however, was not enough to offset the losses accumulated since Monday, of 0.65%. The selective thus moves away from the 9,200 points that had cost so much to beat.
In Friday’s session, Fluidra was the main value on the rise (+2.11%), ahead of ArcelorMittal (+1.80%), Indra (+1.67%), Rovi (+1.64 %), CaixaBank (+1.63%) and Acerinox (+1.56%). On the other hand, Solaria (-0.94%), Sacyr (-0.89%), Acciona Energías Renovables (-0.63%), Bankinter (-0.62%) and Unicaja Banco (-0.53%) stood out. %).
The nervousness continues
In any case, and while waiting for the final agreement, nervousness will continue to mark the next sessions. “There are Republican leaders who on Thursday were already pointing to a pact that, in any case, we believe that the legislators of the most radical wings of both sides will not like,” the analysts indicate. That is, even with agreement, the discrepancies will remain strong.
For now, investors are trying to rely on macroeconomic data that suggests that the US will be able to avoid recession. This same Friday, the consumer confidence of the University of Michigan was known, a key indicator to feel the health of that pillar – that of consumption – in the first world power. And the data was much better than expected. Specifically, it reached 59.2 points, compared to the 57.9 anticipated by the market.
But beware. Because on Friday the personal consumption price index (PCE) was also known, one of the inflation data in which the Federal Reserve (Fed) pays most attention to decide its monetary policy. In April it rose unexpectedly to 4.4%, while the underlying rate (which excludes energy and fresh food) continues to soar at 4.7%.
Conclusion: consumer resistance and excessively high inflation still reinforce the idea that the country’s central bank could choose to raise interest rates again in June or July, moving away from the expected pause in the rate hike cycle that investors already took it for granted just a few weeks ago.
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