Juan Pablo Uffoff (Cingular Bank) | European indices declined marginally in a day marked by various macroeconomic data published. In the eurozone, economic activity today confirmed a 1.3% year-on-year increase in Q1 (+0, 1% quarterly), following an upward revision of 1.1% per annum of GDP for 2023 by the European Commission Went. Despite the resilience shown by Eurozone economies, investors remain cautious due to a decline in the ZEW indicator of economic sentiment for Germany, which has been in negative territory for the first time since December 2022 and may expect a slight slowdown in the economy. main European power.
On the other hand, the decline in the purchasing power of households is reflected in the decrease in retail sales in the United States in April. Still-high inflation, banking sector volatility and the effect of monetary policy tightening will continue to reduce consumers’ purchasing power, which could, in turn, negatively impact industrial production, which will contract by -0.1 as expected by the consensus in April. It increased by 0.5% as compared to . On the other hand, tensions are rising as June 1 approaches, the deadline for Democrats and Republicans to negotiate raising the debt ceiling to avoid debt default.
The heightened uncertainty among investors has been fueled by published macroeconomic references from China. Despite significant rebounds in retail sales (+18.4% year-on-year) and industrial production (+3.6%) in April, both indicators underperformed market expectations. This reinforces the notion that the recovery in economic activity in China after the end of the zero-covid policy is much more gradual than initially anticipated.
The day of increase in the yield of sovereign bonds. Following the latest 25bp rate hike by the Fed and suggestions that the current rate hike could be halted at the next meeting, fixed income investors’ attention is now focused on a possible debt default from the United States. In this sense, United States Secretary of the Treasury Janet Yellen has indicated that her institution will not be able to meet all of the government’s obligations if an agreement is not reached to temporarily raise or suspend the debt ceiling. Similarly, Yellen urged the Democratic and Republican parties to reach an agreement, highlighting the potential impact on business and consumer confidence, the cost of short-term borrowing, and the credit rating of the United States.