The Day at a Glance | December 19 2024

The Top

• The Timely Indicator of Economic Activity (IOAE) forecasts that the economy could expand by 1.5% in 2024, according to seasonally adjusted figures.

• In the US, the economy expanded by an annualized 3.1% in the third quarter of 2024, accelerating from the previous estimate of 2.8% and the 3.0% recorded in the second quarter.

• Later today, the Central Bank of Mexico will announce its final monetary policy decision of the year; we expect a 25-basis-point cut will bring the reference rate to 10.0%.

• For the week ending December 14^th, initial unemployment insurance claims in the US stood at 220,000 (230,000 expected), down from the 242,000 recorded the previous week.

• The Bank of England left its interest rate at 4.75% during its December 2024 meeting, citing rising consumer inflation, wage growth, and certain inflation expectation indicators.

• The Bank of Japan (BoJ) maintained its benchmark interest rate at 0.25% on Wednesday. However, a dissenting vote from one member in favor of raising rates suggests the bank could be moving toward tighter monetary policy.

• Oil prices fell on Thursday after the Federal Reserve indicated it would slow the pace of rate cuts in 2025, potentially hurting economic growth, reducing fuel demand, and strengthening the dollar.

Economic Environment

The Timely Indicator of Economic Activity (IOAE for its acronym in Spanish) forecasts that the economy could expand by 1.5% in 2024, based on seasonally adjusted figures. The IOAE, a nowcasting tool for the Global Indicator of Economic Activity (IGAE), estimates that the Mexican economy expanded by 0.3% y/y in October and 1.0% y/y in November 2024, based on seasonally adjusted figures. By components, industrial production—a measure encompassing construction, manufacturing, electricity generation, and mining—contracted by -3.3% y/y in October, and the IOAE forecasts a -1.0% y/y decline in November. On the services side, the timely indicator estimates growth of 1.7% y/y in October and 1.5% y/y in November. On the margin, this translates to a -0.6% m/m decline in the IGAE for October, followed by a 0.1% m/m increase in November, also based on seasonally adjusted figures. Incorporating the IOAE’s growth estimates into the IGAE points to a -0.3% y/y contraction in the last quarter of 2024, with an average growth rate of 1.5% for the full year, according to seasonally adjusted figures.

Markets and Companies

In the US, futures for major indices are trending higher. The Federal Reserve cut its benchmark rate by 25 basis points, placing it within a range of 4.25%–4.50%, in line with market expectations. However, the Fed signaled that rate cuts in 2025 could proceed at a slower pace. In Europe, major indices were trading lower following the Bank of England’s decision to maintain its interest rate at 4.75%, as expected. In Asia, markets closed in negative territory after the Bank of Japan decided to keep its monetary policy unchanged.

In the commodities market, oil prices remained steady as the Fed expressed caution regarding future rate cuts. Meanwhile, precious metals prices were mixed, with gold reaching $2,600 per ounce.

In fixed income, the yield on the 10-year US Treasury rose to 4.53% (+1.6 bps), while the 2-year Treasury yield fell by 5 bps, setting at 4.30%. These changes signal adjustments based on the Fed’s outlook for future rate cuts.

In Mexico, IPC futures are virtually unchanged, while the exchange rate stood at 20.34 pesos per dollar, compared to 20.39 yesterday at market close. 

Corporate News

• Semiconductor manufacturer Micron Technology released its 2Q25 guidance, which fell below analysts’ estimates. The company forecasts revenues of $7.9 billion ± $200 million, compared to the $8.98 billion expected.

• Darden Restaurants, the parent company of Olive Garden and LongHorn Steakhouse, reported better-than-expected results. Additionally, it revised its guidance up, forecasting $12.1 billion in fiscal year revenues, up from the previous $11.8 billion estimate.