The Day at a Glance | November 12 2024

The Top

• The Ministry of Finance will send an economic package to Congress by the end of this week. 

• According to Reuters, Donald Trump is expected to select US Senator Marco Rubio as his Secretary of State. 

• Olli Rehn, head of Finland’s central bank, said that more ECB interest rate cuts are coming, and the deposit rate could reach the so-called neutral level in the first half of next year. 

• German investor confidence took a hit this month, an economic research institute (ZEW) reported on Tuesday, as Donald Trump’s election victory in the US and the collapse of the government in Berlin triggered greater uncertainty over Germany’s already weakened economy. 

• The Bank of England’s Chief Economist, Huw Pill, said on Tuesday that labor market data showed inflationary pressures in Britain remain too high for the BoE’s 2% inflation target. 

• Oil prices logged little change on Tuesday as the market awaited more direction from OPEC’s monthly report.

Economic Environment

The Ministry of Finance will send an economic package to Congress by the end of this week. On November 15^th, the Ministry of Finance and Public Credit (SHCP for its acronym in Spanish) will send Congress the “2025 General Economic Policy Criteria” (or, as it’s more commonly known, “the economic package”), which is a document outlining the Federal Government’s macroeconomic outlook for 2024 and 2025, serving as a draft for the Revenue Law and the Federation’s Expenditure Budget. Regarding the macroeconomic outlook, we expect the Ministry of Finance to lower its 2025 growth forecast while raising its inflation and interest rate estimates. Additionally, it is expected to revise its public deficit estimate up for next year from the 2.5% proposed in the “2025 Preliminary Criteria” to a level between 3.5% and 4.0%. It will also update its baseline forecasts for public finances for 2026-2030, providing insight into whether the SHCP is planning a fiscal consolidation program and its potential scale. Investors will closely follow this document from the Ministry of Finance, as while immediate fiscal consolidation is not expected, there may be a plan to achieve this within the administration’s term. This would occur amidst a context in which increased social programs and the continuation of some unfinished flagship projects from the previous administration are anticipated.

Markets and Companies​

Futures for main US stock indices are logging slight declines, taking a breather after last week’s rally driven by the US election results, which pushed the market to new all-time highs. Investors are analyzing potential policies of the new administration and considering which sectors and assets may benefit as a result. Additionally, the market remains focused on key cabinet appointments by Donald Trump. In Europe, stock markets are down, impacted by a drop in mining stocks, while Asia also logged declines.

US Treasury bond yields are rising, with the 2-year bond trading at 4.33% and the 10-year bond at 4.39%. The market is still digesting the implications of Donald Trump’s victory and is awaiting October´s inflation data for the US, which is set to be released this week.

In commodities, gold is slightly down, trading at $2,607 per ounce; it´s recorded a pullback in recent sessions due to the strengthening dollar and expectations that interest rates may decrease at a more moderate pace.

In Mexico, IPyC futures are trading higher.

As for the peso-dollar exchange rate, it is trading at 20.40 after closing at 20.33 yesterday.

Industrias Peñoles reported that its Sabinas mine is facing operational issues. This mine, owned by Peñoles, is the source of silver for the Silverstream agreement signed with Fresnillo in 2007. Both companies have initiated discussions to assess the impact of these issues and potential adjustments to the agreement. Peñoles holds a 75% stake in Fresnillo plc.

Corporate News

• Shares of Home Depot rose pre-market after reporting quarterly results that exceeded expectations, prompting the company to raise its earnings guidance for 2024. 

• Shopify reported results above consensus expectations, with its shares rising nearly 14%.