The Day at a Glance | September 26 2024

The Top

• The US economy grew in line with previous estimates for 2Q24, according to data from the Bureau of Economic Analysis (BEA).

• Today at 1:00 p.m., the Central Bank of Mexico will release its monetary policy announcement, with expectations of a 25 basis point rate cut.

• According to Reuters, China plans to issue special sovereign bonds worth around 2 trillion Yuan this year as part of a new fiscal stimulus, adding to a series of measures to combat intense deflationary pressures and achieve its economic growth targets.

• Minutes from the July announcement revealed that Bank of Japan officials are divided on how quickly the central bank should raise interest rates, underscoring the uncertainty surrounding the timing of the next borrowing cost increase.

• War and extreme weather are weighing on economic growth in countries covered by the European Bank for Reconstruction and Development, the bank said in a semiannual report published Thursday.

• Oil prices fell on Thursday, reversing earlier gains, after news that Saudi Arabia, the world’s largest crude exporter, would forgo its target price in preparation to increase production.

Economic Environment

The US economy grew in line with previous estimates for 2Q24, according to data from the Bureau of Economic Analysis (BEA). The final estimate indicates that 2Q24 GDP expanded by 3.0% on a quarterly annualized and seasonally adjusted basis. Thus, the US economy grew slightly more than the consensus estimate of 2.9%, and in line with the BEA’s second estimate. Additionally, the BEA revised private inventory investment (8.3% vs. 7.5% prev.), federal government spending (4.3% vs. 3.3% prev.), and imports (7.6% vs. 7.0% prev.). On the other hand, consumer spending increased slightly less than the second estimate (2.8% vs. 2.9% prev.), and there were downward revisions for nonresidential fixed investment (3.9% vs. 4.6% prev.) and exports (1.0% vs. 1.6% prev.). Meanwhile, the Bureau of Economic Analysis released the periodic annual update and revisions of the National Economic Accounts, highlighting that the US economy grew by 1.6% in the first quarter of 2024, greater than the previously reported 1.4%. Lastly, 2023 GDP growth was revised up from 2.5% to 2.9%, and for 2022, GDP expanded by 2.5% (previously 1.9%). At the time of writing this report, the Atlanta Fed’s GDPNow model estimates that the US economy could grow by 2.9% during 3Q24, which points to the economy´s resilience. 

Markets and Companies

The US stock market opened with gains, led by the Nasdaq, driven by the semiconductor sector. Meanwhile, August´sdurable goods orders remained stable, and weekly unemployment claims fell more than expected, suggesting there´s strength in the labor market. In Europe, performance is positive, led by mining, technology, and consumer goods sectors. The Swiss National Bank (SNB) cut its interest rate by 25 basis points to 1.0%, marking its third reduction this year. Asian markets are optimistic following announcements of economic stimulus measures in China and technological advances in South Korea, where the mass production of the world’s first 12-layer HBM3E chip for artificial intelligence applications was announced. Lastly, in Japan, the BoJ´s Julymeeting minutes were released.

In the commodities market, oil prices dropped after Saudi Arabia announced plans to increase crude production in December, signaling its willingness to abandon its unofficial target of keeping prices at USD $100 per barrel. Meanwhile, precious metal prices, such as gold and silver, posted slight gains due to expectations of imminent rate cuts by the Federal Reserve in the coming months.

Regarding fixed income, the yield on the 10-year bond rose slightly to 3.79%, while the 2-year bond yield increased by 4 basis points, reaching 3.60%.

Domestically, stock markets are trading higher, with the IPCstanding at 53,422.2 points. After closing at 19.66 yesterday, the exchange rate is now at 19.55.

For the fourth time, Cemex has been included in Fortune’s Change the World list, ranking 24^th. The company was recognized for its VeryNile initiative in Egypt, which cleans the Nile River and reuses the collected waste. This project has improved water quality, reduced pollution, and created 150 jobs for local fishermen.

FEMSA announced the departure of Carlos Arenas Cadena as General Manager of OXXO Mexico after 40 years with the company. Carlos Arroyo Rico will take over on November 19^th, and both will work together until March 2025 to ensure a smooth transition and continuity of strategies.

Corporate News

• Semiconductor company Micron Technology issued a revenue forecast that exceeded expectations.

• Meta Platforms unveiled its new virtual reality headset and augmented reality glasses. Following these announcements, Bank of America is optimistic about the new AI capabilities, raising its price target for the company’s stock.

• Southwest Airlines shares rose after the company raised its revenue forecast for the third quarter and announced a USD $2.5 billion share buyback program.