The Day at a Glance | December 3 2024

The Top

• Gross fixed investment and private consumption slowed in Mexico in September.

• On Monday, Federal Reserve Governor Christopher Waller stated that, since inflation is still expected to decrease to 2%, he is inclined – “for now” – to support another interest rate cut in mid-November.

• Tariffs expected to be imposed by incoming US President Donald Trump’s administration could reduce economic growth and inflation in the 20 euro-sharing countries, ECB board member PieroCipollone said on Tuesday.

• French lawmakers are set to vote Wednesday night on a no-confidence motion that is likely to topple Michel Barnier’s coalition, deepening the political crisis in the Eurozone’s second-largest economy.

• China has banned exports to the US of items related to gallium, germanium, and antimony minerals with potential military applications, a day after Washington’s latest crackdown on China’s chip sector.

• Oil prices rose nearly 1% on Tuesday as investors anticipated the outcome of this week’s OPEC+ meeting.

Economic Environment

Gross fixed investment and private consumption slowed in Mexico in September. Gross fixed investment decreasedby -3.3% y/y in September, according to original figures. Within these figures, construction dropped by -5.3% y/y, while machinery and equipment increased by 0.9% y/y, based on seasonally unadjusted data. By sector, private investment declined by -1.8% y/y, and public investment fell sharply by -14.0% y/y. On a seasonally adjusted monthly basis, investment contracted by -0.8% in September.Meanwhile, private consumption in Mexico increased by 1.0% y/y in September, based on original figures. Within this, spending on imported goods rose by 2.7% y/y, while spending on domestic goods and services increased by 0.8% y/y. On a seasonally adjusted monthly basis, private consumption decreased by -0.3% in September. The private consumption and investment figures indicate that the economy continues to lose momentum, particularly as both components of aggregate demand slowed toward the end of the third quarter.

Markets and Companies

Futures for main US stock indices are up slightly after the S&P and Nasdaq reached new all-time highs yesterday. This week, investors remain focused on the upcoming November US employment figures, which will provide insights into monetary policy decisions in the months ahead. The market currently assigns an implied probability of a 25-basis-point rate cut at the Fed’s meeting this month, which would leave the year-ending rate range at 4.25%-4.50%. In Europe and Asia, stock markets were trading higher.

US Treasury yields are showing mixed movements as markets await employment data later this week and comments from several Fed officials. The 2-year note is yielding 4.17%, while the 10-year note stands at 4.19%.

In commodities, oil prices are rising ahead of the OPEC meeting on December 5^th, where the organization is expected to extend production cuts to boost prices, which have faced pressure this year. In metals, gold and silver are trading higher.

In Mexico, IPC futures are trading lower.

The peso-dollar exchange rate is at 20.36 after closing at 20.38 yesterday.

In its extraordinary shareholders’ meeting, Telmex, a subsidiary of América Móvil, approved an increase of its share capital by $45.2 billion pesos and the issuance of 296.2 million shares. The transaction will be carried out through the capitalization of accounts receivable from prior contributions by AMX, as part of a strategy to strengthen equity and implement corporate restructuring.

Alsea completed the sale process of Burger King in Spain. Yesterday afternoon, Alsea announced that the sale of Burger King operations in Spain, as disclosed on August 5^th, 2024, has been finalized. This move aligns with the company’s strategy to streamline its brand portfolio, focusing on efficiencies to enhance profitability.

Cofece has scheduled Walmex’s review and, possibly, a resolution for December 3^rd. According to Cofece’swebsite, it will present, discuss, and, if applicable, resolve the case involving a potential anticompetitive practice by Walmex.

Corporate News

• US Steel shares fell nearly 7% after Donald Trump stated he would oppose Nippon Steel’s acquisition of the company.

• AT&T announced it expects to generate over $18 billion in free cash flow by 2027. The company also stated plans to double its fiber infrastructure and enhance its 5G network. Its shares were up in pre-market trading.