And all this, although the US Treasury bond yields continued their upward trend, with the US 10-year benchmark reaching 1.46%. Investment banks forecasts continue to point to an increase in bond yields in the vicinity of 1.75% to 2% by the end of 2021.
Although these higher interest rates are considered to slow down the rally of stocks, especially for the technological ones with the highest valuation levels, there are already investors who argue the reflation. Lower interest rates result from a growing economy and, therefore, are favorable for the markets.
But there are other factors to consider, such as inflation. If inflation remains at current high levels, the need to continue raising interest rates will increase and come sooner than expected. Therefore, it will be of great interest for investors to know the Personal Consumption Expenditure figure this week, the data preferred by the Fed for inflation, which could impact the market if it moves away from the forecast numbers.
Investors will also be interested to find out whether this week if the US Senate disables the debt ceiling and allows the administration to meet its payment commitments. The deadline is next Thursday. It would be seen as unfavorable for the markets if it cannot go beyond the debt ceiling and a default occurs. If so, this is something that would not be the first to happen in the United States.
And of course, what will happen to Evergrande real estate, if the Chinese authorities are going to rescue it or if they are going to let it fall, continues to cause uncertainty in the market. Evergrande has not complied with the coupon payment of bonds issued in dollars that expired last week. Still, the Group has approximately three weeks to make the payment.
Therefore, there are still elements that cannot be considered positive for the evolution of stocks soon.
Technically, there was no substantial variation in the North American indices that closed at levels near the resistance zones and coincided with Fibonacci retracements around 0.618% of the last bearish leg.
Unlike their American peers, the European indices, such as Germany30, ended the last day of the week with losses of 0.74%. In this case, the German elections held this Sunday have influenced its performance.
Germany30 technically ended the week around the 100-day SMA line, passing 15,600 and still far from the primary resistance, around 15,790.
Sources: Bloomberg.com, reuters.com
