Fixed Income Market Overview

The Bank of England (BoE) maintains its 5.25% benchmark interest rate, hinting at a future reduction if inflation declines, as Governor Andrew Bailey expresses confidence in easing borrowing  costs. Bailey refrains from specifying a timeline for adjustments, with the Monetary Policy Committee (MPC) divided, seven advocating hold and two for a decrease. Despite a March decline to  3.2%, persistent inflationary pressures prompt discussions of expedited rate cuts, with forecasts suggesting further decreases. The BoE’s economic outlook forecasts growth in Q1 2024, with  commercial rates influenced by the BoE’s decision, leading to an upward adjustment in mortgage rates. Meanwhile, U.S. Treasury yields show mixed movement, with the 10-year yield rising to  4.502%, while the 2-year yield drops slightly. Investors scrutinize Federal Reserve remarks for rate trend insights amidst uncertainty, as Boston Fed President Susan Collins emphasizes steady  rates aligned with inflation targets. Weekly jobless claims hit highs since August, with consumer sentiment data awaited.

icon-oneUS weekly jobless claims highest in more than eight months as labor market eases.
icon-twoJapan’s Takeda Pharma to restructure after annual profit slump.
icon-threeAlibaba rolls out latest version of its large language model to meet robust AI demand.
icon-fourOracle’s $28 Billion Cerner Health Tech Bet Sputters With Lost Customers and Slipping Sales.
icon-fiveAlphabet Progressing in Talks to Buy HubSpot, Sources Say.

 

Major Indicies

Symbol Price Change %Change
DJIA 39,387.76 331.37 0.85%↑
NASDAQ 18,113.46 28.45 0.16%↑
SNP 500 5,214.08 26.41 0.51%↑
NIKKEI 38,073.98 -128.39 -0.34%↓
VIX 12.69 -0.31 -2.38%↓
HIS 18,537.81 223.95 1.22%↑

Bonds

Name Yeild CHG
US 10-YR 4.46% -0.04
US 30-YR 4.61% -0.03
US 5-YR 4.48% -0.03
JPN 10-YR 0.91% 0.03
UK 10-YR 4.14% 0.00

Futures & Commodities

Name Last Change %Change
WTI CRUDE 79.26 0.27 0.34%↑
NAT GAS 2.301 0.114 5.21%↑
GOLD 2,340.30 18.00 0.78%↑
SILVER 28.37 0.76 2.77%↑
COPPER 4.585 0.042 0.94%↑
Data and Content as of Previous Closing Day. Source: MarketWatch

 

Equity Market Overview

Banco Bilbao Vizcaya Argentaria

BBVA, Spain’s second-largest bank, proposed a 12.23 billion euro takeover bid for Sabadell, which was rejected by Sabadell’s board for undervaluing its potential. Despite the rejection, BBVA pursued the bid directly to Sabadell’s shareholders. This maneuver is uncommon in European banking, akin to Intesa’s takeover of UBI Banca in 2020. BBVA aims to diversify from its primary  market in Mexico by acquiring Sabadell, offering a premium of 30% over April 29 closing prices. BBVA’s leadership sees this move as an opportunity for growth and profitability, emphasizing benefits for all stakeholders.

ARM Holdings

Shares of Arm, a British chip designer, dipped 5% despite a robust fourth-quarter revenue of $928 million, up 47% year-over-year, driven by AI application demand. The growth was fueled by a  60% increase in licensing business to $414 million and a 37% rise in royalty revenue to $514 million, led by Armv9-based chips. However, Arm’s fiscal 2025 revenue guidance of $3.8-4.1 billion fell short of analysts’ $3.99 billion expectation, unsettling investors. Analysts from Citi highlighted the strength of Arm’s licensing business amidst the revenue forecast disappointment, emphasizing  its pivotal role in future royalty growth. Arm’s unique position as a semiconductor industry “Switzerland,” providing chip architectures to companies like Qualcomm and Nvidia, underscores its  significance in the market despite regulatory hurdles and ownership changes, with its recent Nasdaq IPO witnessing remarkable success amidst heightened demand for advanced AI-capable chips.

Warner Bros. Discovery Inc.

Warner Bros. Discovery’s first-quarter results fell short of analyst projections, with a loss per share of 40 cents compared to an expected 24 cents loss and revenue of $9.96 billion against an expected $10.231 billion. Despite this, the company’s stock saw a slight increase in morning trading. Warner Bros. Discovery attributed the decline in revenue to a 7% drop compared to the same  quarter last year, citing challenges in its studio segment and lower revenue from its video game sector. However, the company reported positive growth in its streaming unit, adding 2 million direct-to-consumer subscribers and witnessing a 70% increase in advertising revenue. The announcement of a partnership with Disney to bundle streaming services marks a strategic move to combat churn and enhance profitability, with CEO David Zaslav emphasizing the importance of bundling to mitigate subscriber losses.

 

Latest Update: May 10, 2024