The Day at a Glance | January 29 2025

The Top

• Employment weakened in Mexico at the end of 2024.

• Later today, the Federal Reserve’s monetary policy decision will be released. We estimate that the Fed will keep the federal funds rate unchanged. It will be interesting to see any signals regarding the Fed´s stance during Fed Chair Jerome Powell’s press conference.

• Markets expect the Bank of Canada to cut its benchmark rate by 25 basis points amidst inflation hovering near its 2.0% target and weak growth prospects.

• Bank lending to businesses in the Eurozoneincreased last month, suggesting that interest rate cuts are starting to filter through to the real economy, according to ECB data.

• Minutes from the Bank of Japan revealed that board members discussed how to use estimates of the economy’s neutral interest rate to guide future rate hikes. One member noted that the BOJ’s policy rate remains far from that level.

• Oil prices edged lower on Wednesday due to rising US crude inventories and easing concerns over Libyan supply, while US tariffs on imports from Canada and Mexico also drew investors’ attention.

Economic Environment

Employment weakened in Mexico at the end of 2024. According to data from the National Occupation and Employment Survey (ENOE, for its acronym in Spanish), at the end of 2024, the economically active population (EAP) stood at 60.8 million people, 59.3 million of whom were employed and 1.5 million were actively seeking work, meaning they were unemployed. Among those employed, 31.8 million worked in some form of informal employment, such as self-employed workers in the agricultural sector or those without social security. This meant that 53.7% of the employed population was in the informal sector. By economic activity, between the end of 2023 and 2024, primary activities lost 360,000 jobs, secondary activities logged a decrease of 452,000 jobs, of which 387,000 were in manufacturing, while the tertiary sector created 920,000 jobs. Regarding the unemployed population, it stood at 2.4% of the EAP in December 2024, down from 2.6% in December 2023. ENOE data shows that the labor market weakened in 2024, mainly due to a sharp loss of jobs in the agricultural and manufacturing sectors, while the services sector continued to expand. This year, it will be crucial to determine whether the employment trend continues to deteriorate or begins to improve.

Markets and Companies

The S&P 500´s futures are down as investors await the Federal Reserve’s first decision of 2025. Markets will also focus on Powell’s comments in his first press conference during Trump’s second term. Meanwhile, investors anticipate a major wave of “Big Tech” earnings reports, including Meta Platforms, Microsoft, and Tesla.

European markets trade higher on Wednesday as investors in the region assess a series of corporate reports. The Stoxx 600 was up 0.7% by mid-morning, with sectors trading mixed.

In Asia, Japan and Australia’s markets advanced on Wednesday, supported by Wall Street’s overnight rebound, while several Asia-Pacific markets remained closed for the Lunar New Year holiday.

In commodities, oil prices decline on Wednesday due to rising US crude inventories and easing concerns over supply disruptions in Libya, while attention shifts to potential US tariffs on imports from Canada and Mexico.

Gold prices remain steady as investors are cautious ahead of the Fed’s decision. Meanwhile, in Mexico, IPyC futures show gains (+0.99%).

The exchange rate stands at 20.52, after closing at 20.56 yesterday.

In 4Q24, Gfnorte reported 14.2% y/y loan portfolio growth, while net interest income before provisions rose 7.6% y/y, and net income increased 5.2% y/y. The report was in line with our expectations, implying a neutral impact. In today’s earnings call, we expect to gain insight into the company’s outlook for 2025. After a year of strong loan portfolio growth in 2024, 2025 could see some moderation, though profitability performance may remain resilient.

Corporate News

• F5 shares rose nearly 14% after the application security company provided a fiscal second-quarter outlook that exceeded Wall Street expectations.

• Nextracker shares surged more than 24% after beating revenue expectations and offering stronger-than-expected earnings guidance.