The Day at a Glance | August 9 2024

The Top

• In Mexico, production fell in June, according to original figures.

• In China, consumer prices rose at a slightly faster pace than expected in July, while producer prices remained in deflation.

• US Republican presidential candidate Donald Trump and his Democratic opponent Kamala Harris will debate on September 10^th on ABC, marking the first face-to-face confrontation between the rivals in what polls show is a close race.

• Fed officials are increasingly confident that inflation is cooling down enough to cut the federal funds rate in the future.

• Oil prices rose on Friday and are on track for a weekly gain of more than 3%. OPEC+ is planning to increase supply in October, but this may be postponed if global demand weakens.

Economic Environment

In Mexico, production fell in June, according to original figures. June´s figures logged an annual -0.7% decline in the country’s industrial activity, according to original data. Within this, two of the four components recorded annual expansion: construction (+1.5%) and water & gas generation and distribution (+3.6%), while mining and manufacturing fell by -4.3% and -0.9%, respectively. As a result, Mexico’s industrial production posted an accumulated growth rate of 1.4% for the January-June period, based on non-seasonally adjusted figures, compared to the same period of last year. On a monthly basis, industrial production in the country increased by 0.4% in June, according to seasonally adjusted figures. Manufacturing expanded by +2.0% m/m, while construction, mining, and water & gas generation and distribution fell by -2.3%, -2.0%, and -0.1% m/m, respectively, according to seasonally adjusted figures. June´s figures are consistent with a slowing economy; however, the rebound in manufacturing was logged due to good performance in US manufacturing, which also recorded a rebound in June. 

In China, consumer prices rose at a slightly faster pace than expected in July, while producer prices remained in deflation. China’s annual consumer inflation rose by 0.5% y/y in July, above the market expectation of 0.3% y/y. Meanwhile, core inflation stood at 0.4% y/y in July 2024. On a monthly basis, consumer inflation in the seventh month of the year was 0.5% (-0.2% prev.). As for annual producer inflation, July´s reading decreased by -0.8%, the same as the previous month but less than what the market expected (-0.9%). Overall, July´s consumer inflation figures surprised to the upside, largely due to climate-related disruptions in food supply, while producer deflation persists, keeping underlying consumption trends weak. 

Markets and Companies

The US stock market opened lower, following a rebound in the country´s main indices yesterday. The week has been volatile, with investors digesting a lot of information: prospects of interest rate cuts by the Federal Reserve, a rate hike by the Bank of Japan, a potential economic slowdown, and geopolitical conflicts. In Europe and Asia, mixed figureswere observed in stock markets.

In the debt market, the yield on the 10-year Treasury bond stands at 3.93%, while the 2-year bond is trading at 4.03%. Although the curve remains inverted, the spread between the two bonds has recently decreased.

In commodities, oil is maintaining a positive streak and is set to close the week with gains due to geopolitical tensions in the Middle East. Gold is also trading higher, continuing itspositive trend seen throughout the year.

In Mexico, the IPC is up and is trading at 52,889.9 points.

Regarding the exchange rate of the peso against the dollar, it is trading at 18.89 today, after closing at 18.87 yesterday.

Corporate News

• Paramount’s shares were rising thanks to the company’s quarterly earnings exceeding expectations. Additionally, the company announced a cost-cutting plan.

• Dropbox reported better-than-expected results in terms of both revenue and earnings, leading its shares to trade higher.

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