The Day at a Glance | December 22 2023

*The Global Economic Activity Indicator (IGAE) surprised with a -0.1% m/m drop in October. 

*PCE inflation slowed down from 2.9% y/y in September to 2.6% y/y in October. 

*The United Kingdom’s economy is on the brink of a technical recession due to a contraction in the 3Q23 and null growth in the 2Q23. 

*Joe Biden will sign an executive order on Friday that will allow Washington to impose sanctions on financial institutions that assist Russia in evading sanctions. 

*Ships diverted due to the Red Sea crisis are facing overwhelmed African ports. Twelve percent of global trade passes through the Suez Canal.

Economic environment

In Mexico, the Monthly Global Economic Activity Indicator (IGAE for its acronym in Spanish), a proxy for the monthly gross domestic product, decreased -0.1% m/m in October, according to seasonally adjusted figures. The decline in October was caused by a decrease in the services sector, which set at -0.5%, while the industrial and agricultural sectors grew 0.6% and 1.6%, respectively. In its annual change, October´s IGAE grew by 4.2%, averaging 3.5% from January to October. By sectors, annual growth figures in October were positive: agriculture increased 5.6%, the industrial sector did the same in 5.5%, and services grew by 3.4%. The drop in services during October was greater than what was forecasted by the IOAE (-0.5% vs. -0.3%e.) on December 19th.

The Federal Reserve’s preferred indicator for monitoring inflation surprises positively. In the United States, disposable personal income and personal consumption expenditure increased by 0.4% and 0.3%, respectively, in line with market estimates. Meanwhile, annual inflation of the personal consumption expenditure (PCE), an indicator used by the Federal Reserve to guide its monetary policy, decreased to 2.6% in October from 2.9% in September. The market expected it to set at 2.8%. Core PCE inflation stood at 3.2% in October compared to the market’s expected 3.3%. Both indicators are still above the Federal Reserve’s inflation target of 2%.

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