The Day at a Glance | February 13 2025

• In the Eurozone, industrial production contracted more than expected in December.
• In the United States, producer prices (PPI) rose sharply in January 2025.
• US President Donald Trump announced that, starting Wednesday night, he will impose reciprocal tariffs on all countries that apply tariffs on US imports. This measure heightens fears of a global trade war and could accelerate inflation in the US.
• The British economy expanded by 1.4% y/y in 4Q24, its best performance since 4Q22, following an upward revision of the previous quarter’s growth to 1.0% y/y and surpassing forecasts of a 1.1% expansion.
• Japan’s annual wholesale inflation rose in January to a seven-month high of 4.2%, accelerating for a fifth consecutive month. This reflects persistent price pressures and reinforces market expectations of another rate hike this year.
• The Kremlin said Thursday it was impressed by US President Donald Trump’s stance on ending the war in Ukraine and confirmed that details are being prepared for a meeting between Trump and Russian President Vladimir Putin.
• Oil prices fell 1% on Thursday, pressured by the potential signing of a peace agreement between Russia and Ukraine, along with rising crude inventories in the US.

Economic Environment

In the Eurozone, industrial production contracted more than expected in December. The latest data for the block showed a sharp 1.1% m/m decline in industrial activity (prev. +0.4%). This negative performance was mainly driven by a 2.6% drop in capital goods, a 1.9% decline in intermediate goods, and a 0.7% contraction in durable consumer goods. Meanwhile, non-durable consumer goods increased by 5.1%, and energy rose by 0.5%. On an annual basis, the Eurozone´s industrial production fell by 2.0% in December, with declines in three of its five components. The annual drop was led by intermediate goods (-2.4%), durable consumer goods (-3.2%), and capital goods (-8.1%), while non-durable consumer goods and energy rose by 8.3% and 0.5%, respectively. Additionally, the Eurozone’s largest economies also logged annual declines in December 2024, with Germany contracting by 4.0% (prev. -3.0%) and France by 1.3% (prev. +1.0%). Overall, the Eurozone´s industrial production contracted more than expected in December, suggesting that the sector’s two-year recession is far from over, despite some confidence indicators and orders showing signs of improvement.

In the United States, producer prices (PPI) rose sharply in January 2025. The Bureau of Labor Statistics (BLS) reported that producer inflation increased by 0.4% m/m, seasonally adjusted, setting below the upwardly revised 0.5% m/m in December but above the 0.3% m/m estimate. Within the data, service prices rose by 0.3% m/m, while goods prices increased by 0.6% m/m. The core index, which excludes energy and food, rose by 0.3% m/m, also seasonally adjusted. On a twelve-month basis, PPI inflation stood at 3.5%, while core inflation set at 3.4%, both exceeding the market consensus estimate of 3.2%. Overall, US producer prices rose sharply in January, reinforcing evidence of an inflation rebound and strengthening market expectations that the Federal Reserve will not cut interest rates before the second half of the year.

Markets and Companies

US stock futures were trading slightly higher this morning as investors digested the latest inflation data. The Producer Price Index rose more than expected in January, reaching 0.4% month-over-month, compared to the 0.3% forecast.

In Europe, markets were trading higher. Siemens stood out due to strong quarterly results, while Barclays fell short of expectations with its revenue guidance. In Asia, markets closed mixed.

In the commodities market, oil prices continued to decline. Expectations of a peace agreement between Russia and Ukraine put pressure on prices, while Trump’s comments on reciprocal tariffs added concerns about demand. Meanwhile, gold rose to $2,914 per ounce, supported by a weaker dollar and uncertainty surrounding US trade policy.

In fixed income, the US 10-year Treasury yield fell 4.9 bps to 4.57%, while the 2-year yield declined 3.7 bps to 4.32%.

In Mexico, IPC futures were trading higher at 54,344 points, while the exchange rate stood at 20.55 pesos per dollar, compared to 20.53 yesterday at market close.

Walmex will release its quarterly results this afternoon. We estimate high single-digit revenue growth, driven primarily by strong performance in its Mexican operations, which account for approximately 80% of consolidated revenue. The gross margin is expected to remain stable, though higher expenses could dilute the consolidated EBITDA margin by approximately 40 basis points.

Corporate News

• Social media and news company Reddit reported a lower-than-expected user base but exceeded revenue and earnings forecasts.
• Honda and Nissan officially canceled their merger negotiations but will maintain an alliance focused on electric vehicles.
• Cisco Systems surpassed revenue and earnings expectations, reporting 9% growth in its latest quarter and raising its 2025 guidance.