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NY stock futures fell as U.S. Treasuries extended losses ahead of the Federal Reserve's policy decision, with 10-year yields rising above 1,67% for the first time in more than a year. Stocks have tumbled this year as investors bet an economic recovery driven by vaccine rollouts and President Biden's $1,9 trillion stimulus package will ultimately boost inflation. S&P 500 futures traded slightly lower, while Nasdaq futures fell 1.12%. The EuroStoxx 600 Index fell, and South Korean stocks retreated as Samsung Electronics Co. warned it is dealing with the fallout from a "serious imbalance" in semiconductors globally. Fed policy and outlook updates due out Wednesday take center stage as the global recovery gains traction, with inflation expectations at 12-year highs.
Fixed rent
Emerging market investors are looking for clues about the path of US rates after yields rose in February, hurting appetite for riskier assets. The Fed's meeting would be important as it could be the first time we hear some hawkish comments from them, as the economic health has improved since their last meeting. Speculators believe there is sufficient recovery in the US and that there is no need for monetary expansion to be so aggressive, instead being more moderate. Measures of implied volatility in emerging markets are rising as traders await the Federal Reserve's policy decision, with the main focus on the central bank's projections for future interest rate increases. Central banks in developing countries are also in focus. Policymakers in Brazil are forecast to raise the Selic rate by 50 basis points on Wednesday. Colombia carries out its first local public debt swap, reducing amortizations by $4.3 trillion in 2022. The Ministry of Finance exchanged bonds in its public debt portfolio for $4.3 trillion. TES bonds denominated in pesos maturing in 2022 were replaced with TES bonds in pesos and UVR maturing between 2029 and 2037. The swap contributed to improving the profile of Colombian domestic public debt. The average life of the portfolio was extended from 8.29 years to 8.43 years, while the average coupon was reduced from 6.69% to 6.68%. This had a neutral impact on the liability balance after settling the transaction at market prices. In January, they carried out a management transaction for US$1.228 billion in international markets. The Ministry of Finance auctioned short-term Treasury bonds (TES) for $325 billion, maturing on March 8, 2022. The placement was highly in demand from investors. Purchase bids were received for $553 billion in face value, 2.2 times the amount offered. This demand enabled the activation of over-allotment clauses. The auction's cut-off interest rate was 1,940%. The curves show the July 2024 TES at +1,5bp to 3,75%, the April 2028 TES at +1bp to 5,81%, the 3-month IBR Swaps stable at 1,68%, and the 5-year Colombia CDS at -0,5bp to 115,88bp.
Money Exchange
The Colombian peso (COP) remained unchanged on Tuesday, closing at 3.559,50 per dollar. The Federal Reserve's monetary policy decision and Chairman Jerome Powell's press release later in the day will affect the yields on ten-year Treasury bonds, impacting the performance of the dollar and, consequently, the Colombian peso. Meanwhile, the uncertainty surrounding this critical event has moved the markets, and oil prices opened the session lower with significant declines, but remain above US$64 per barrel for both benchmarks, demonstrating vulnerability for the dollar in Colombia.
Variable income
In the US market, major stock index futures are showing mixed performance amid a rise in 10-year US Treasury bond yields as market participants await any signs from the Federal Reserve of a faster recovery toward policy normalization. On the other hand, President Joe Biden's comments that Vladimir Putin will face consequences for directing efforts to overthrow the 2002 US presidential election to Donald Trump caused unease in the markets and helped stock market futures mostly fall. In line with this, Nasdaq and S&P 500 futures fell by 1.16% and 0.34% respectively, while Dow Jones futures increased by around 0.12%. Meanwhile, Apple Inc, Facebook Inc, Netflix Inc, and Microsoft Corp declined between 0.2% and 0.6% in pre-market trading. Finally, among the key events of the session, special attention is paid to the FOMC Meeting.
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