Wall Street slides as Trump-Xi summit ends without breakthrough and global bond sell-off deepens
US stock indices ended the week lower as investors pulled back from risk after the Trump-Xi summit closed without a trade or energy breakthrough. The pullback came alongside a deepening global bond sell-off, while the Strait of Hormuz remained closed and crude prices stayed elevated. The combination poses a twin demand-and-financing challenge for Latin American exporters.
Wall Street closed the week in the red after the United States and China wrapped up their summit without producing the trade or energy breakthroughs investors had hoped for. The S&P 500 and Nasdaq finished more than one percent lower, with semiconductor and large technology names leading the decline. Markets cited continuing uncertainty over reopening of the Strait of Hormuz, Chinese purchases of US soybeans and energy, and arms sales to Taiwan.
The equity move came together with a deepening sell-off in government bonds globally. The yield on the 30-year US Treasury punched above 5.1 percent, and yields in Europe and Japan also climbed. Hotter inflation prints and a paring back of rate-cut expectations are pushing investors away from long-duration fixed income. Brent crude held around 90 dollars per barrel, supported by the closed Hormuz route.
For Latin America the picture is mixed. High prices for crude and base metals support exporters such as Brazil, Chile and Peru, but rising global yields are weighing on regional currencies and lifting external borrowing costs. Friday's close left the Brazilian real and the Mexican peso lower on the week against the dollar, while sovereign risk premia in the region edged up.
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