The Day at a Glance | July 16 2024

The Top

• The International Monetary Fund (IMF) updated its global growth estimates.

• In the United States, retail sales remain strong.

• Donald Trump made a triumphant entry to crown the first day of the Republican National Convention, days after surviving an assassination attempt that has reshaped the presidential race.

• Japan is prepared to take all possible measures to counter excessively volatile currency movements, Chief Cabinet Secretary Yoshimasa Hayashi said on Tuesday, keeping markets on alert for the possibility of new intervention to back the yen.

• Oil prices fell more than 1% on Tuesday over concerns that a slowdown in China’s economy would curb demand.

Economic Environment

The International Monetary Fund (IMF) updated its global growth estimates. The IMF’s forecasts indicate that the global economy will grow by 3.2% in 2024, remaining unchanged from April´s report. For 2025, the growth forecast was revised upwards from 3.2% to 3.3%. For the US, growth in 2024 was slightly revised down from 2.7% to 2.6%, while for 2025, it remained at 1.9%. For China´s economy, the estimated growth rates are 5.0% and 4.5% for 2024 and 2025, respectively. In the Eurozone, 0.9% and 1.5% growth rates are expected for the same periods. For Mexico, the IMF revised the 2024 estimate down from 2.4% to 2.2% and raised the 2025 forecast from 1.4% to 1.6%.

In the United States, retail sales remain strong. In June, retail sales stagnated, but the result was better than the consensus forecast of a -0.3% m/m decline. Excluding the more volatile items, such as autos and gasoline, retail sales rose by +0.8% m/m in June, after increasing by 0.3% m/m in May. On an annual basis, retail sales increased by 2.3%, while sales excluding autos and gasoline rose by 3.8%. The aforementioned figures include annual growth rates of +8.9% in online sales, +4.3% in clothing, and +1.7% in department stores, while auto and gasoline sales fell by -2.7% and -0.4%, respectively. Retail sales figures continue to show resilience among consumers, as those excluding the more volatile items still indicate strong underlying momentum.

Markets and Companies

The US stock market is up as investors digest the release of Q2 2024 corporate earnings. Today, Bank of America’s report stands out positively, as it posted better-than-expected profits. In the coming weeks, market attention will remain focused on the earnings season. On the economic front, US retail sales in June grew at a pace higher than expected by analysts. In Europe, markets recorded declines, which wereled by the mining and automotive sectors, while in Asia, a negative trend was observed. 

In the debt market, the yield on the 10-year Treasury bond is at 4.2%, logging a slight decline, reacting to Jerome Powell’s comments that the Federal Reserve may not wait for inflation to reach the 2% target before lowering the reference rate.

Regarding commodities, oil is recording declines following recent data on China´s economy, which generated expectations of slower crude oil demand. Gold, on the other hand, is up due to higher probabilities of an interest rate cut in September.

In Mexico, the IPC index is up, standing at 54,325.3 points. The exchange rate of the peso against the dollar is at 17.70 after closing at 17.73 yesterday.

Fibra Monterrey announced the signing of a credit agreement with Banorte for a total of $245.4 million, at a variable rate of SOFR plus a spread of 180 to 200 basis points. This will allow Fibra to reduce its debt costs.

The National Association of Self-Service and Department Stores (ANTAD for its acronym in Spanish) reported June sales results. During June, same-store sales (SSS), which include those with more than one year of operation, recorded a +3.3% increase. As for total stores, which cover both existing stores and those opened in the last 12 months, there was a +6.4% rate of growth compared to the same period last year.

Corporate News

• Morgan Stanley reported better-than-expected profits, thanks to a strong performance in its investment banking and asset management segments. Despite this, its shares were down.

• Bank of America’s shares were up thanks to a better-than-expected quarterly report. The bank also revised its financial margin guidance upwards.

• UnitedHealth reported quarterly profits that set above estimates.