The Day at a Glance | December 20 2024

The Top

● In the US, solid consumption figures were recorded, and PCE inflation edged up slightly.

● U.S. President-elect Donald Trump said on Friday that the European Union may face tariffs if the bloc does not cut its growing deficit with the United States by making large oil and gas trades with the world’s largest economy.

● A spending bill backed by Donald Trump failed to pass on Thursday in the U.S. House of Representatives, leaving Congress without a clear plan to avert a rapidly approaching government shutdown.

● As widely anticipated, China kept its benchmark interest rates unchanged; however, persistent deflationary pressures and moderate credit demand highlight the need for additional stimulus to support the broader economy.

● Retail sales in the United Kingdom rose by 0.2% in November, falling short of the 0.5% expected, suggesting that budget concerns remain a significant issue.

● Oil prices fell on Friday on worries about demand growth in 2025, especially in top crude importer China, putting global oil benchmarks on track to end the week down more than 3%.

Economic Environment 

In the US, solid consumption figures were recorded, and PCE inflation edged up slightly. Disposable personal income and personal consumption expenditures grew solidly by 0.3% (previously 0.7%) and 0.4% (previously 0.3%) respectively in November, in nominal terms, suggesting consumption remains robust. Meanwhile, the annual Personal Consumption Expenditures (PCE) inflation rate—an indicator tied to the Federal Reserve’s inflation target—stood at 2.4% in November, in line with consensus expectations and above the 2.3% reported in October. Within the index, annual changes show services increased by 3.8% (previously 3.9%), energy prices fell by -4.0% (previously -6.0%), food prices rose by 1.4% (previously 1.0%), and goods prices dropped by -0.4% (previously -1.0%). The core index, which excludes energy and food, remained steady at 2.8% in November. Month-over-month, PCE inflation grew by 0.1% in November. Looking forward, the Cleveland Fed’s Nowcastingmodel estimates headline CPI inflation will be at 2.9% and headline PCE inflation at 2.8%, both for December.

Markets and Companies

U.S. index futures started the session with losses as investors evaluated the latest inflation data. The personal consumption expenditures (PCE) price index rose 2.4% year-over-year in November, slightly below expectations. Meanwhile, Amazon workers have launched strikes at seven facilities across the U.S., demanding better working conditions. These actions add to growing labor tensions at other companies like Starbucks, where employees in three cities are also on strike. Finally, European markets were trading lower, while Asian markets closed in negative territory.

In the commodities market, the strengthening dollar and concerns over future crude oil demand from China are pushing oil prices downward. On the other hand, gold prices were rising but remain on track for a weekly decline due to expectations of slower rate cuts by the Federal Reserve.

In fixed income, the yields on 2-year and 10-year Treasury bonds stand at 4.25% and 4.50%, respectively.

In Mexico, IPC futures are trading flat at 49,250 points. Meanwhile, the exchange rate is at 20.22 pesos per dollar, down from 20.32 in the previous session’s close.

Corporate News

• Amazon workers at seven U.S. facilities have launched strikes, citing grueling quotas and unfavorable working conditions. The company stated that it does not expect significant operational disruptions.

• Nike reported quarterly revenue of $12.35 billion, surpassing expectations of $12.13 billion. However, results remain below those recorded last year.

• Starbucks’ unionized employees in three U.S. cities have gone on strike, demanding higher wages, more staff, and fairer schedules. The company highlighted that it has reached over 30 agreements with the union since April and remains open to further negotiations.