The Day at a Glance | January 15 2025

The Top

• In the US, CPI inflation closed 2024 at 2.9%.

• In Mexico, private consumption slowed in October.

• In the Eurozone, industrial production decreased by -1.9% y/y in November 2024, in line with consensus expectations, deepening the -1.1% y/y contraction recorded the previous month.

• Germany’s economy contracted for the second consecutive year in 2024, highlighting the depth of the crisis affecting Europe’s largest economy.

• Overnight borrowing costs for some Chinese financial institutions rose as high as 16% on Wednesday, due to a cash shortage in the market ahead of the Lunar New Year holiday week.

• The Bank of Japan will debate raising interest rates next week, Governor Kazuo Ueda said Wednesday, signaling his intention to increase borrowing costs barring a market shock driven by Trump.

• Armed conflicts have been identified as the top risk for 2025, according to a World Economic Forum survey published on Wednesday, emphasizing growing global fragmentation as government and business leaders prepare for next week’s annual meeting in Davos.

• Oil prices rose slowly on Wednesday as the market focused on potential supply disruptions due to sanctions on Russian tankers, though gains were tempered by uncertainty about their impact.

Economic Environment

In the US, CPI inflation closed 2024 at 2.9%. The Bureau of Labor Statistics (BLS) released December’s consumer price index (CPI) data, showing a 0.4% m/m increase, seasonally adjusted. The energy category rose by 2.6% m/m, accounting for nearly 40% of the overall CPI increase. Annually, CPI inflation stood at 2.9% for 2024, slightly above our forecast of 2.8% and in line with the market consensus, according to unadjusted figures. Core inflation, which excludes energy and food, increased by 0.2% m/m in December after four consecutive months of 0.3% m/m growth. On an annual basis, core inflation reached 3.2% in 2024, below the consensus forecast of 3.3%. Overall, the inflation data was well-received by markets, particularly due to the slight decline in core inflation. Following the report, the 10-year Treasury yield dropped from 4.76% to 4.69%.

In Mexico, private consumption slowed in October. Gross fixed investment fell by -2.6% y/y in October, according to unadjusted figures. Construction declined by -11.0% y/y, while machinery and equipment increased by 7.8% y/y. By sector, private investment fell by -0.5% y/y, and public investment decreased by -18.3% y/y. On a seasonally adjusted monthly basis, investment rose by 0.1% in October. Private consumption in Mexico logged a 1.4% y/y increase in October, according to unadjusted figures. Within this category, spending on imported goods rose by 6.0% y/y, while spending on domestic goods and services increased by 0.7% y/y. On a seasonally adjusted monthly basis, private consumption declined by -0.7% in October. These private consumption figures indicate that the economy continues to lose momentum, as monthly growth was only recorded in 3 of the first 10 months of 2024, while declines were logged during the rest of the year. With this context, the data suggests that Mexico´s economy will start 2025 with weakness.

Markets and Companies

Futures for major US indices are up after the Consumer Price Index report showed that core inflation unexpectedly slowed in December. Simultaneously, the fourth-quarter corporate earnings season began positively on Wednesday, with several major banks (JPMorgan Chase, Goldman Sachs, Wells Fargo, Citigroup) releasing their quarterly results.

In Europe, markets are trading higher as investors digested a lower-than-expected inflation figure from the UK and awaited US inflation data. Meanwhile, key indices in Asia closed with negative returns (Nikkei 225, Shanghai).

In commodities, oil prices are rising slightly on Wednesday as the market focuses on potential supply disruptions due to sanctions on Russian tankers. 

Metals and cryptocurrencies are also gaining ground. 

In Mexico, futures for the IPC index are higher (+1.75%). 

The exchange rate is set at 20.42 after closing at 20.52 yesterday.

Corporate News

• BlackRock shares rose more than 3.7% after the world’s largest asset manager reported fourth-quarter results that exceeded expectations.

• Citigroup gained over 3% following the release of fourth-quarter results that beat analyst forecasts.