Newsletter Mercados

The S&P 500 closed down 1.24% on Friday at 7,408.50 points, weighed down by escalating geopolitical tensions in the Middle East and a rebound in Treasury yields. The Nasdaq Composite lost 1.54%, while the Russell 2000 declined 2.44%, reflecting a rotation into quality. In Europe, the Euro Stoxx 50 closed practically flat (-0.01%), although the FTSE 100 fell 1.04% and the CAC 40 1.82%, weighed down by the energy sector and inflation uncertainty. In Asia, the Nikkei 225 dropped 0.97% and the Hang Seng 1.11%, pressured by mixed Chinese industrial production data and caution ahead of the G7 meeting. Over the weekend, G7 statements in Paris offered no surprises, but attention remains on the evolving Middle East conflict and its impact on energy prices.

The US Treasury curve experienced a significant bear steepening on Friday: the 10-year bond yield rose 12 basis points to 4.59%, while the 2-year yield increased 9 bps to 4.09%. The long end also rallied, with the 30-year closing at 5.12% (+10 bps). This movement reflects a combination of still persistent inflation data, hawkish Fed comments, and the geopolitical risk premium. The 2s10s spread widened slightly to 50 bps, suggesting the market is pricing in near-term monetary policy tightening. 10-year USD interest rate swaps also rose, in line with Treasuries. There were no relevant auctions on Friday; the auction of 3- and 6-month bills is expected today.

The US government bond market saw a clear sell-off on Friday, with the 10-year bond reaching its highest level in several weeks (4.59%). Selling pressure was concentrated in the belly and long end of the curve, driven by expectations that the Fed will keep rates higher for longer. The 10-year German Bund also rose 9.8 bps to 3.15%, in line with the global trend. The spread between the Italian BTP and the Bund widened slightly to 79 bps, reflecting some risk aversion in the European periphery. In the primary market, no significant government bond auctions are expected today in the US.

Corporate credit ETFs closed lower on Friday, reflecting the overall negative tone. LQD (investment grade) fell 0.64% to $107.86, while HYG (high yield) lost 0.19% to $79.46. JNK also declined 0.11%. The movement suggests a widening of credit spreads, especially in investment grade, where interest rate sensitivity is higher. Risk aversion and the rebound in Treasury yields penalized corporate fixed income, although the decline was contained in high yield, indicating that investors are not yet pricing in a widespread credit stress scenario. Flows into credit ETFs remained mixed, with no signs of panic.

The DXY index remains firm, trading around 105.20, supported by the rebound in Treasury yields. EUR/USD ceded ground to 1.16442, falling 0.10%, weighed down by dollar strength and caution in Europe. USD/JPY rose 0.17% to 158.839, breaking higher after hawkish Fed comments. GBP/USD appreciated slightly (+0.22%) to 1.3376, supported by better-than-expected British inflation data. USD/MXN advanced 0.42% to 17.3029, reflecting global risk aversion. AUD/USD was the weakest currency, falling 0.73%, pressured by declining commodity prices and mixed data from China.

WTI crude oil experienced a sharp decline of 4.30% on Friday, closing at $100.89 per barrel, despite geopolitical tensions in the Middle East. The decline is attributed to profit-taking after previous gains and speculation about a potential OPEC+ supply increase. Brent, however, rose slightly by 0.07% to $109.27, widening the spread with WTI. Natural gas rose by 2.70% to $3.04/MMBtu, driven by cooling demand. Gold remained stable at $4,557.50/oz (+0.09%), acting as a safe haven in a context of uncertainty. Corn and wheat rose by 2.35% and 2.87% respectively, supported by tensions in the Black Sea and production cuts in Ukraine.

S&P 500 futures are flat this morning, with the e-mini around 7,400 points, while Nasdaq 100 futures are little changed. On Friday, the U.S. equity market underwent a broad correction, with a clear selling bias in small-cap (Russell 2000 -2.44%). The technology sector was the hardest hit, with the Nasdaq losing 1.54%, although the Dow Jones also dropped 1.07%. The weakness is attributed to the combination of rising yields, which pressure valuations, and geopolitical uncertainty. The lack of clear macro catalysts for today suggests that the market could remain in a narrow range, awaiting news regarding the conflict in the Middle East or statements from the Fed.

Bitcoin is trading flat this morning at $77,251.14, after a Friday session with no significant movements (-0.23%). Ethereum shows a slight recovery of 0.26% to $2,133.19. The cryptocurrency market continues to lack clear direction, awaiting regulatory news or institutional adoption. Correlation with equities remains positive, hence caution in traditional markets limits gains.

The market starts the week cautiously, after Friday's correction and without clear short-term catalysts. Elevated Treasury yields and geopolitical tensions remain the main drags on equities. Attention will focus on G7 statements and oil price developments. Key levels to watch are the 7,350 support on the S&P 500 and the 4.60% resistance on the 10-year. The week will be packed with macro data (PMI, GDP) and Fed speeches, so the market is likely to remain in a narrow range until a new directional catalyst emerges.