The Day at a Glance | February 28 2025

The Top

• In the US, weak consumption data was reported, and PCE inflation declined in January.
• President Donald Trump threatened to impose a 25% tariff on Mexico and Canada on March 4^th, as well as an additional 10% tariff on China.
• The European Union and India committed to signing a free trade agreement by the end of the year, marking the first deadline commitment as they seek to mitigate the impact of US tariffs.
• Inflation in Germany remained unchanged at 2.8% y/y in February, while inflation in France stood at 0.9% y/y, its lowest level in four years.
• Canada’s economy grew 2.6% at an annualized quarterly rate in 4Q24, exceeding market consensus expectations.
• In January, the US goods trade deficit widened by 25.6% m/m to $153.3 billion. A year earlier, the deficit stood at $90.2 billion.
• Oil prices fell by more than 1% and are on track for their first monthly decline since November, as markets brace for US tariffs and Iran’s decision to resume oil exports from the Kurdistan region.

Economic Environment

In the US, weak consumption data was reported, and PCE inflation declined in January. US disposable personal income rose 0.9% (vs. 0.4% prev.), while nominal personal consumption expenditures fell 0.2% (vs. +0.8% prev.) in the first month of 2025. The decline in consumption was accompanied by an increase in the household savings rate, which rose from 3.5% in December to 4.6% in January, signaling consumer caution. Meanwhile, annual personal consumption expenditure (PCE) inflation, the Federal Reserve’s target indicator, stood at 2.5% in January, in line with market expectations and down from 2.6% in the previous month. The core index, which excludes energy and food, came in at 2.6% in January, down from 2.9% in December and its lowest level since June 2024. On a monthly basis, both headline and core PCE inflation rose 0.3% in January. Looking ahead, the Cleveland Fed’s Nowcasting model estimates that headline CPI inflation will stand at 2.84% and headline PCE inflation at 2.40% in February 2025.

Markets and Companies

US stock futures were trading higher ahead of the market open as investors assessed the latest personal consumption expenditures (PCE) price index, which came in line with expectations at 2.5% y/y. In Europe, markets were mixed, weighed down by the threat of new US tariffs on EU products, with tech stocks leading losses. In Asia, markets closed lower, with Japan posting the steepest declines.

In commodities, oil prices are down as crude exports resumed in Kurdistan, potentially increasing market supply. Meanwhile, gold fell to $2,854 per ounce, pressured by a stronger dollar.

In fixed income, US Treasury yields showed mixed movements, with the 10-year yield at 4.26% and the 2-year yield rising to 4.06%.

In Mexico, IPC futures were trading higher at 52,894 points. Meanwhile, the exchange rate stood at 20.45, after closing the previous session at 20.49.

Livepol reported its 4Q24 results yesterday afternoon. Revenue rose 9.0% (vs. 8.5%e), driven by solid performance across all business lines, with notable growth in the commercial segment (8.2%). Additionally, cost control in operating expenses allowed EBITDA to increase by 5.3% (vs. 3.6%e), reaching a margin of 19.7% (-70 bps y/y). At the net level, profit rose 11.4%, supported by strong performance in both the commercial and financial segments.

Corporate News

• Despite surpassing revenue expectations, Nvidia investors remain concerned about a decline in its profit margin.
• Dell Technologies reported quarterly revenue of $23.93 billion, missing market expectations of $24.56 billion. Weak demand for servers and PCs weighed on the company’s outlook.
• Alibaba and PDD Holdings were trading lower after China threatened retaliation over the new US tariffs on its products. Trade tensions have dampened investor confidence in the Chinese tech sector.
• Bitcoin’s price was retreating, trading near $80,000, extending its recent correction after reaching record levels in January.