The Day at a Glance | February 10 2022

The Top

*Inflation in the United States surprised to the upside (7.5% vs 7.2%e.).

*Central Bank of Mexico will make a monetary policy decision this afternoon.

*Russia and Belarus are carrying out military exercises on the border with Ukraine; the Kremlin once again denied intentions to invade.

*Sent by the U.S. government, John Kerry held meetings with Lopez Obrador to ensure that the electric power reform meets USMCA principles.

*Supply of credit accelerated in China during January after the country`s central bank eased monetary conditions in light of the slowdown.

*Joe Biden held a meeting with Saudi king to discuss the stability of oil supply and its prices, negotiations with Iran and the war with Yemen.

Economic environment

Inflation continues to accelerate in the United States. The most recent inflationary figures surprised to the upside by logging a 0.6% increase in consumer prices during January, which led inflation to set at an annual 7.5%. The rise exceeded estimates of a 0.5% monthly increase (7.2% annual). Underlying inflation also logged a 0.6% monthly increase and accelerated the annual rate to 6%, also exceeding estimates (0.5%e. m/m; 5.9%e. y/y). Food prices once again recorded a faster monthly rise to 0.9%; while energy prices maintained a constant pace (0.9%). Among the most volatile components, commodities continue to lead the increase in prices (1% monthly; 11.7% annual), with considerable and persistent rises in used vehicles (1.5% monthly; 40.5% annual) and clothing (1.1% monthly; 5.3% annual). Medical supplies logged their largest monthly rise in the last 12 months (0.9%). Services logged a more moderate increase in prices (0.4%), although an acceleration was seen in transportation services (1% monthly) as well as medical services (0.6%); both recorded their largest monthly increases in 12 months. Housing increased 0.3% monthly (4% annual), its slowest rate since August. The data confirms that the FED should act soon in order to contain inflationary pressures and risks. There is still one more inflationary figure (February`s) that will be made known before the Federal Reserve`s next monetary policy meeting, but today`s data, along last week`s data on wages, reinforces expectations of a 50bp interest rate increase once the FED starts to carry out its cycle of interest rate hikes.

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