In the United States, the 2nd quarter balance sheet season is advancing, with 27% of companies reporting results, of which 86% exceed earnings per share (EPS) estimates and 80% exceed revenue estimates. Overall, profits show an increase of +37.9% year-on-year, above the +23.2% expected at the end of June. In this environment, also influenced by geopolitical factors, the yields of American Treasury bonds increased during the week, with the 1-year bond standing at 4.11% and the 10-year bond at 4.68%. This week, attention will be on the Federal Reserve (Fed) meeting, in which the reference rate is expected to remain unchanged at the current 3.75%. Likewise, the Gross Domestic Product (GDP) for the 2nd quarter will be known, for which an expansion of +2.3% annualized is projected, and the price index of household personal consumption expenditure (PCE) for June - the entity's preferred indicator for monetary policy decisions -, with +3.3% expected in the measurement that excludes food and energy (core). In parallel, the 2nd quarter earnings season continues to unfold, with the report of 4 of the “Magnificent 7”. The scenario is presented with an inflation level above the entity's objective (2.0%) and a stable labor market, which is why the interest rate is expected to remain at historically high levels. This allows obtaining high nominal returns for a longer period of time for investment grade bonds, with sections of the curve up to 5 years in duration being attractive.

Weekly Monitor

International

This week's focus in the United States will be on the Fed's monetary policy meeting, with expectations that the benchmark interest rate will remain unchanged at its current 3.75%. The preliminary Q2 GDP figures will also be released, with annualized growth of 2.3%, along with the June PCE inflation figures—the Fed's benchmark for interest rate decisions—projected at 3.6% year-on-year and 3.3% for core inflation. Meanwhile, the Q2 corporate earnings season continues, with four of the "Magnificent Seven" companies set to report their results. In the Eurozone, Q2 GDP figures will be released, with an estimated annualized increase of 0.5%, along with preliminary July inflation projections of 2.9% year-on-year and 2.4% for core inflation. Finally, new monetary policy decisions will be announced in England, Japan, and Chile, with interest rates expected to remain at their current levels of 3.75%, 1.0%, and 4.5%, respectively.

The second-quarter earnings season is underway, with 27% of companies reporting results. Of these, 86% exceeded earnings per share (EPS) projections and 80% exceeded revenue projections. Last week, Alphabet, Novartis, 3M, General Motors, Philip Morris, Blackstone, Intel, and Lockheed Martin reported EPS and revenue above expectations. Meanwhile, T-Mobile, AT&T, American Express, and Verizon reported higher-than-expected EPS but lower-than-expected revenue. Tesla, for its part, only reported revenue above projections. This week, the focus will be on the earnings reports from four of the "Magnificent Seven": Microsoft, Meta Platforms, Amazon, and Apple, along with Procter & Gamble, Coca-Cola, Visa, Barclays, Starbucks, Mastercard, and AbbVie, among others.

In the United States, preliminary data from the Purchasing Managers' Index (PMI) – leading indicators of economic activity – for July showed 53.8 points for manufacturing, lower than both expectations and June's reading, and 53.6 points for services, exceeding the consensus forecast. It's worth noting that a reading above 50 points indicates expansion, while a reading below that threshold indicates contraction.

In this context, also influenced by heightened geopolitical tensions, US Treasury yields widened across the entire yield curve during the week. Thus, the 1-year bond yield rose from 3.99% to 4.11%, the 3-year yield from 4.21% to 4.37%, and the 10-year yield from 4.55% to 4.68%. Meanwhile, the main US stock indices closed with widespread losses, with the Dow Jones being the least affected at -0.4% for the week.

In other news, the European Central Bank held another monetary policy meeting, leaving the benchmark interest rate unchanged at its current 2.4%, in line with expectations. The decision reflects a climate of marked volatility in energy prices and uncertainty regarding the outlook. Against this backdrop, the euro closed at $1.14 after falling 0.6% for the week, while the yield on the 10-year German Treasury bond rose to 3.17%.