The Day at a Glance | August 13 2024

The Top

• In the United States, PPI inflation slightly declined in July.

• According to a Reuters survey, the European Central Bank will cut its interest rates two more times this year, in September and December.

• China’s bank loans fell more than expected in July, reaching their lowest level in nearly 15 years, raising expectations that the central bank may implement further easing measures.

• Japan’s parliament will ask the central bank governor, Kazuo Ueda, to participate in special sessions next week to discuss last month’s decision to raise interest rates.

• German investor sentiment deteriorated more than expected in August, recording its biggest drop in two years, the ZEW economic research institute said on Tuesday.

• Oil prices remained stable on Tuesday after five consecutive positive sessions; supply risks persist due to the escalating conflict in the Middle East.

Economic Environment

In the United States, PPI inflation slightly declined in July. The Bureau of Labor Statistics (BLS) released its Producer Price Index (PPI) inflation figures for July, which logged a 0.1% m/m change, below the market consensus and June’s 0.2% m/m figure. July´s growth was driven by a -0.2% m/m drop in service prices, which was offset by a 0.6% increase in goods prices. Core PPI inflation, which excludes food, energy, and trade services, posted a 0.3% m/m increase in July, up from 0.1% m/m a month earlier. On an annual basis, PPI inflation stood at 2.2% (prev. 2.7%) and core PPI at 3.3% (prev. 3.2%). The annual drop in producer price inflation indicates lower cost pressures, consistent with the Federal Reserve’s aim for lower inflation.

Markets and Companies

Main US stock indices are trading higher, responding to July´s Producer Price Index inflation figure, which logged a 2.2% year-on-year increase—lower than what the consensus expected. This backs the expectation that the Federal Reserve might begin cutting interest rates in its September meeting. As a result, the market’s focus has now shifted to the Consumer Price Index inflation report, which is set to be released tomorrow.

In the debt market, the 10-year Treasury bond yield fell to 3.86%, reacting to the Producer Price Index inflation data.

In commodities, oil prices are retreating after the positive streak seen in previous sessions, reacting to geopolitical tensions in the Middle East.

In Mexico, the IPC index opened higher, trading at 53,228.2 points.

Regarding the peso-to-dollar exchange rate, it stands at 18.97 after closing at 19.06 yesterday.

Gentera announced that Patricio Diez Bonilla is stepping down as CEO of Banco Compartamos.

Cemex announced that it has received regulatory approval for the sale of its assets in the Philippines.

Corporate News

• Starbucks announced that it will replace its CEO, Laxman Narasimhan, with Brian Niccol, CEO of Chipotle.

• Home Depot shares were declining as the company revised its 2024 guidance downwards, citing a more challenging second half of the year.

• Taiwan Semiconductor reported strong revenue growth, with a 45% year-on-year increase.