The Day at a Glance | December 17 2024

The Top

• Mexico’s October retail sales fell unexpectedly.

• US retail sales increased more than expected in November.

• China plans to raise its public deficit to 4.0% of GDP—a record high—while maintaining an economic growth target of 5.0%, according to sources interviewed by Reuters.

• Germany’s business confidence deteriorated more than expected in December, according to the ZEW survey, which highlighted a pessimistic outlook for the coming months due to geopolitical uncertainty and industrial declines in Europe’s largest economy.

• The abrupt resignation of Canada’s Finance Minister, Chrystia Freeland, left the government adrift less than a month before the inauguration of a new US administration, which might impose sanctions on Canadian exports.

• Reuters reported that the vast majority of the market expects the Bank of Japan to keep interest rates unchanged in this week’s monetary policy meeting.

• Oil prices decreased on Tuesday as weak economic data from China renewed demand concerns, while investors remained cautious ahead of the US Federal Reserve’s monetary policy decision.

Economic Environment

Mexico’s October retail sales fell unexpectedly. INEGI reported that retail sales decreased -0.3% m/m in October, falling short of the market consensus expectation of a 0.2% m/m increase and below the 0.1% m/m rise recorded in September. On an annual basis, according to original figures, retail sales fell by -1.2% in October. Within the annual data, online and catalog sales stood out with a 16.4% increase, while supermarket and department store sales contracted by -4.2%. Meanwhile, grocery, food, and beverage sales rose3.5%. Overall, retail sales logged another slowdown, as marginal growth was expected but instead declined, bringing renewed concerns of weakening consumption at the start of the fourth quarter. 

US retail sales increased more than expected in November. In November, retail sales rose 0.7% m/m, surpassing expectations of a 0.5% m/m increase, consistent with the previous month’s figure. Excluding the more volatile categories, such as autos and gasoline, retail sales rose 0.2% m/m in November, matching the increase seen in October. On an annual basis, retail sales increased 3.8%, while sales excluding autos and gasoline rose 3.9%. The annual figures included notable increases of 9.8% in online sales, 6.5% in vehicle sales, and 4.1% in building materials, while sales of sporting goods and gasoline fell -3.9% and -1.4%, respectively. Overall, retail sales exceeded expectations in November, once again indicating that consumption remains strong midway through the fourth quarter, suggesting the economy continues to show robust momentum as 2024 comes to an end. 

Markets and Companies

Futures for major US stock indices are trading lower, following mixed changes in the equity market yesterday. Gains were led by tech sector stocks, with companies such as Apple, Alphabet, and Tesla reaching new record highs. Meanwhile, the Federal Reserve’s monetary policy meeting begins today, with the decision set to be announced tomorrow. The market expects a 25-basis-point rate cut, and the Fed’s statement is expected to provide signals about the direction of upcoming decisions.

Treasury yields are trending higher, as investors await the Fed’s monetary policy decision and its accompanying statement. The 2-year yield is trading at 4.27%, while the 10-year yield stands at 4.42%.

In commodities, oil prices are down, following last week’s gains and amidst concerns that supply surplus conditions could carry over into next year.

In Mexico, IPC futures are logging marginal changes, standing at 50,840.0 points. The peso-dollar exchange rate is trading at 20.18, slightly below yesterday’s 20.12 at market close. 

Grupo Carso announced the signing of a binding agreement with Talos Energy to increase its stake by an additional 30.10% in its subsidiary Talos Energy México 7, which holds a 17.4% interest in the Zama oil field.

Corporate News

• Pfizer shares rose after the company announced its 2025 revenue expectations, forecasting between $61 billion and $65 billion.

• SolarEdge Technologies shares climbed nearly 14%, as Goldman Sachs upgraded its recommendation from sell to buy.