The Day at a Glance | January 31 2025

The Top

• In the US, solid consumption figures were recorded, and PCE inflation rebounded in December.

• President Donald Trump set Saturday as the deadline to impose 25% tariffs on imports from Mexico and Canada, aiming to curb illegal migration and fentanyl trafficking into the US.

• ECB policymakers supported further easing on Friday, just a day after the fourth consecutive rate cut, despite fresh surveys indicating persistent inflation.

• Inflation in Germany remained stable at 2.8% y/y in January, while retail sales grew in 2024. However, a more moderate increase is expected in 2025 due to heightened uncertainty, according to preliminary data released on Friday.

• Core inflation in Japan’s capital reached 2.5%, its fastest annual pace in nearly a year, significantly exceeding the central bank’s 2% target and keeping market expectations for future rate hikes alive.

• On Thursday, President Donald Trump warned BRICS member countries against replacing the US dollar as a reserve currency, reiterating his threat to impose 100% tariffs.

• Oil prices remained stable on Friday but were on track for a weekly decline as markets awaited whether President Donald Trump would follow through on his tariff threat against Mexico and Canada this weekend.

Economic Environment

In the US, solid consumption figures were recorded, and PCE inflation rebounded in December. In the US, disposable personal income and personal consumption expenditures rose strongly in December, increasing by 0.4% (prev. 0.3%) and 0.7% (prev. 0.6%) in nominal terms, respectively, suggesting that consumption remains robust. Meanwhile, annual personal consumption expenditures (PCE) inflation, the Federal Reserve’s target measure, stood at 2.6% in December, in line with consensus expectations and above the 2.4% reported in November. Within the index, annual service inflation remained at 3.8% (prev. 3.8%), energy prices fell by -1.1% (prev. -4.0%), food inflation stood at 1.6% (prev. 1.4%), and goods prices were flat (prev. -0.4%). The core index, which excludes energy and food, remained at 2.8% in November for the third consecutive month. On a monthly basis, PCE inflation increased by 0.3% in December. Looking ahead, the Cleveland Fed’s Nowcasting model estimates that headline CPI inflation will stand at 2.85% and headline PCE inflation at 2.4% in January 2025.

Markets and Companies

US stock futures were trading higher before market open, following earnings reports from large-cap companies such as Apple. Additionally, December´s PCE price index was released, coming in at 2.6% y/y, in line with expectations. Meanwhile, European markets were advancing, led by gains in the British engineering firm Smiths Group. In Asia, markets closed in positive territory, while Chinese markets remained closed for the Lunar New Year.

In the commodities market, oil prices were rebounding amidst uncertainty over Trump’s tariffs on Canada and Mexico, as their implementation on hydrocarbons remains in question. The market is also closely watching the OPEC meeting on February 3^rd. Meanwhile, precious metals were advancing, with gold logging the strongest performance.

In the bond market, the 10-year yield stood at 4.53%, while the 2-year yield was at 4.21%.

Lastly, in Mexico, IPC futures were trading higher at 52,825 points, while the exchange rate stood at 20.68 pesos per dollar, compared to yesterday´s 20.73 at market close.

Corporate News

• Apple exceeded revenue expectations in its latest quarterly report, reaching $124.3 billion ($124.1B est.), driven by strong services revenue. However, iPhone sales fell short of expectations ($69.1B vs. $71.0B est.).

• US sports bar and restaurant chain Twin Peaks launched its Initial Public Offering (IPO) on Thursday under the ticker TWNP.

• US oil company Chevron reported weaker-than-expected results, as its refining segment posted losses for the first time since 2020. Adjusted earnings per share (EPS) came in at $2.06, below the $2.11 estimate.