The Day at a Glance | January 21 2025

The Top

• Retail sales in Mexico decreased in November.

• The Timely Indicator of Economic Activity estimates slight improvement in the economy by the end of 2024.

• President Donald Trump did not impose tariffs immediately on Monday as previously promised but noted he is considering a 25% tariff on imports from Canada and Mexico starting February 1^st.

• The European Union wants to engage in dialogue and negotiation with US President Donald Trump, stated European Commission President Ursula von der Leyen on Tuesday, warning of the risk of a “global race to the bottom” through the use of tools such as tariffs.

• German investor confidence fell more than expected in January, the ZEW economic research institute reported on Tuesday, following the German economy’s contraction for a second consecutive year.

• China is not seeking a trade surplus and is willing to import more competitive and high-quality goods and services to balance trade, according tostatements made by the country’s Vice Premier Ding Xuexiang at the Davos Economic Forum.

• Canada’s annual inflation rate slowed to 1.8% in December 2024 from 1.9% the previous month, slightly below market expectations, which forecasted it would remain at 1.9%.

• Oil prices fell on Tuesday as investors assessed US President Donald Trump’s delayed plans for new tariffs while he continued to push for increased domestic oil and gas production.

Economic Environment

Retail sales in Mexico decreased in November. INEGI reported that retail sales decreased by -0.1% m/m in November, below the market consensus expectation of a 0.3% m/m increase and above October’s -0.4% m/m decline. Annually, and based on original figures, retail sales decreased by -2.0% in November. Regarding annual data, online and catalog sales rose by 8.6%, while sales at supermarkets and department stores contracted by -5.0%. Meanwhile, sales of groceries, food, and beverages rose1.8%. Overall, retail sales continue to record weakness in household consumption, signaling that the economy lost momentum at the end of 2024.

The Timely Indicator of Economic Activity (IOAE for its acronym in Spanish) estimates slight improvement in the economy by the end of 2024. The IOAE, a nowcasting tool for the Global Indicator of Economic Activity (IGAE), estimates that Mexico´s economy expanded 0.6% y/y in November and 1.1% y/y in December 2024, based on seasonally adjusted figures. By components, industrial production—which includes construction, manufacturing, electricity generation, and mining—declined by -0.9% in November, with the IOAE forecasting a -0.3% y/y drop in December. For services, the timely indicator estimates a 1.6% y/y increase in November and a 2.1% y/y rise in December. On the margin, this translates to monthly growth of 0.2% in November and 0.4% in December, based on seasonally adjusted figures. Thus, the IOAE suggests the economy may have regained some momentum in December, contrasting with most data pointing to a slowdown.

Markets and Companies

Futures for major US stock indices are up, starting the week on a positive note following yesterday’s holiday. Investors are processing the arrival of Donald Trump’s administration, which signed a series of executive orders yesterday. The market had been concerned about the possibility of immediate tariff impositions by the new government. However, the lack of concrete measures on this matter temporarily eased concerns, although Donald Trump commented that the possibility of tariffs remains on the table. In Asia and Europe, equity markets are also up. 

US Treasury yields are declining. The 2-year bond is trading at 4.25%, while the 10-year bond is at 4.56%.

Futures for Mexico’s IPyC index are trading higher.

The Mexican peso is trading at 20.69 pesos per dollar, after reaching a high of 20.79 overnight.

Corporate News

• Shares of 3M rose nearly 4% after the company reported better-than-expected quarterly results.

• Moderna received $590 million from the Department of Health and Human Services to develop its avian flu vaccine. Its shares were rising before market open. 

• Apple shares declined after Jefferies downgraded the company from “hold” to “sell”.