U.S. inflation in May was lower than expected, at 0.1% for both headline and core (vs. 0.2% and 0.3% exp, respectively), while the annual change was 2.4% for headline (in line with expectations) and 2.8% for core (vs. 2.9% exp); the results brought a rally in treasuries on the expectation that the two cuts will be made by the Fed, with short yields falling 8bps and long yields 2bps in a bull steepener, while futures point to a 25bps cut in September and the other in December. Equities had a favorable initial move, but ended sold off, with the Nasdaq down 0.5% and the S&P500 down 0.27% after slight declines in Europe and gains of 0.6% in Asia. In commodities, we saw a major spike in crude oil on reports that the US embassy in Iraq was under threat, leading to a 4% rise that left WTI at $68 and Brent at $70; metals and agriculture fell. VIX rose to 18.

Venezuela and PDVSA remained mostly stable, seeing demand for the long high coupon bonds on the sovereign curve, which finished 0.25pts higher vs. 0.10pts for the rest of both curves.

Latin American credits had another good session, led by Ecuador sovereign, which rose 0.75pts vs. the region's average of 0.35pts.