The Day at a Glance | June 14 2024

The Top

• In Mexico, the Timely Indicator of Private Consumption (IOPC for its acronym in Spanish) estimates that consumption weakened in April and May.

• Mexico´s manufacturing industry´s monthly survey revealed that plant capacity utilization stood at 83% in April, a historic high since records began in 2018.

• The preliminary consumer sentiment index from the University of Michigan for June will be released, with the market expecting it to set at 72 points.

• French Finance Minister Bruno Le Maire warned on Friday that the Eurozone’s second-largest economy faced the risk of a financial crisis if the far right or the left won the upcoming parliamentary elections due to their strong spending plans.

• The Bank of Japan said on Friday that it would start reducing its bond purchases and announce a detailed plan next month to reduce its nearly $5 trillion balance sheet.

• ECB official Martins Kazaks said the central bank could continue lowering interest rates, as the market expects, if inflation keeps decreasing as forecasted.

Economic Environment

In Mexico, the Timely Indicator of Private Consumption (IOPC) estimates that consumption weakened in April and May. The INEGI announced that the IOPC, a nowcasting model for private consumption, could increaseby 4.5% year-over-year in April and 4.8% year-over-year in May, according to seasonally adjusted figures. However, these annual changes would result from a -0.1% month-over-month drop in April and stagnation in May. These monthly changes entail a sudden cooling of the economy since consumption increased by 0.8% month-over-month in March and February and by 1.1% month-over-month in January. Considering the fact that private consumption accounts for approximately 70% of the country´s Gross Domestic Product, the possible weakness indicated by the IOPC figures suggests that the downside risks to economic growth in 2024 could increase.

Markets and Companies

Main U.S. stock indices are logging mixed movements. During the week, the S&P 500 and Nasdaq indices reached new record highs as investors digested the latest message from the Federal Reserve. In its most recent monetary policy meeting, the Fed kept its interest rate unchanged, as expected. However, the Fed revised its outlook and now only anticipates one rate cut this year. In Asia, stock markets were mixed after the Bank of Japan decided to keep its benchmark rate unchanged, although it announced plans to reduce bond purchases. In Europe, markets are recording negative figures, with investors focusing on the evolving political situation in France.

The yield on the 10-year US Treasury bond is down, standing at 4.22%, and reacted to the week’s data showing a slowdown in US inflation.

Meanwhile, oil prices are expected to end the week positively, driven by the expectation of there being greaterdemand during the summer.

In Mexico, the IPC is trading higher, reaching 52,329.0 points. The exchange rate of the peso against the dollar is at 18.591 after closing at 18.382 yesterday.

Corporate News

• Adobe shares are rising as the company reported better-than-expected results and revised its annual outlook upwards.

• Boeing shares are down after it was revealed that the Federal Aviation Administration opened an investigation into the materials used in the manufacturing of its latest models.

• Retailer RH reported quarterly results below expectations, causing its shares to drop by about 12%.