The Day at a Glance | December 23 2024

The Top

● In Mexico, inflation for the first half of December stood at 4.44%.

● Mexico’s trade balance reported a slight deficit in November.

● Mexico’s Global Indicator of Economic Activity (IGAE), a proxy for monthly GDP, contracted by -0.7% m/m in October after a 0.1% increase in September, based on seasonally adjusted figures.

● The U.S. Congress passed spending legislation early Saturday, averting a government shutdown ahead of the holiday season.

● European Central Bank President Christine Lagarde said the euro zone was “very close” to meeting the central bank’s medium-term inflation target, according to an interview published by the Financial Times on Monday.

● The UK economy expande by 0.9% y/y in Q3 2024, a downward revision from the preliminary estimate of 1.0%, but reflecting the strongest growth since Q1 2023.

● Oil prices stabilised on Monday after losses last week as lower-than-expected U.S. inflation data offset investors’ concerns about a supply surplus next year.

Economic Environment 

In Mexico, inflation for the first half of December stood at 4.44%. The National Institute of Statistics and Geography (INEGI) reported that the National Consumer Price Index (CPI) for the first half of December registered a variation of 0.42%, exceeding both our estimate and the consensus of 0.39%. Annually, general inflation for the first half of December was 4.44%, down from 4.54% in the second half of November. Core inflation, which excludes the most volatile items such as energy, agricultural products, and government-regulated prices, rose by 0.50% in the first half of December, surpassing our estimate of 0.36% and the consensus of 0.47%. Annually, core inflation stood at 3.62% in the first half of December, up from 3.57% in the second half of November. By component, goods inflation was 2.44% y/y (previously 2.32%), and services inflation was 4.88% y/y (previously 4.95%). Meanwhile, the non-core component, representing the most volatile prices, showed an annual inflation rate of 7.00% (previously 7.56%). While the inflation figures were broadly in line with expectations, the higher-than-consensus core component warrants monitoring, potentially reflecting a post-“Buen Fin” price adjustment.

Mexico’s trade balance reported a slight deficit in November. In November 2024, the trade balance (exports minus imports) showed a surplus of just USD 133 million, compared to a surplus of USD 561 million a year earlier. In the eleventh month of 2024, exports grew by 3.7% y/y, driven by a 4.0% increase in non-oil exports and a -2.7% decline in oil exports. Within non-oil exports, agricultural exports grew by 3.8% y/y, mineral extraction by 48.5% y/y, and manufacturing by 3.4% y/y. Imports advanced by 5.1% y/y in November, reflecting a decline in oil imports (-15.8% y/y) and an increase in non-oil imports (+1.5% y/y). By goods category, imports of consumer goods, intermediate goods, and capital goods recorded variations of -0.2% y/y, +6.5% y/y, and +3.3% y/y, respectively. Cumulatively, from January to November 2024, the trade balance posted a deficit of USD 10,779 million, compared to a deficit of USD 9,734 million in the same period last year.

Markets and companies

The futures of the S&P and Nasdaq indices show advances. This week, there will be a lower volume of trades due to the Christmas holiday, during which the markets will remain closed. In recent days, investors have absorbed the message from the Federal Reserve, which anticipates a moderation in the pace of interest rate cuts in 2025. The Fed forecasts only two reductions in its benchmark rate for the coming year. On another note, on Sunday, President Joe Biden signed a bill allocating funds to various federal agencies for the next three months, thus avoiding a partial shutdown of some government departments in the United States. In Asia and Europe, stock markets showed a positive bias.

The yield on Treasury bonds is trending upward. Since last week, yields have risen in response to the Federal Reserve’s outlook of only two rate cuts in 2025. However, toward the end of the week, a slight decline was observed after the November inflation data (PCE) was released. Currently, the 2-year bond is trading at 4.32%, and the 10-year bond at 4.55%.

In the commodities market, oil is posting declines due to expectations of a surplus in supply for the upcoming year.

In Mexico, the future of the IPyC index is trading higher, standing at 50,766.0 points.

Regarding the exchange rate, the Mexican peso is trading at 20.17 pesos per dollar, having reached a maximum of 20.20 during the early hours of the morning.

Liverpool announced yesterday the signing of a definitive agreement with members of the Nordstrom family to jointly acquire all the shares representing Nordstrom’s capital stock that are not yet owned by either party. The agreed price is $24.25 per share. If the transaction is completed, Liverpool will indirectly own 49.9% of Nordstrom’s capital stock, while the Nordstrom family will indirectly retain 50.1%.

Corporate news

• Japanese automakers Nissan and Honda announced that they are in talks to explore a potential merger between the two companies. If completed, the resulting company would become the third-largest automaker globally.