The Day at a Glance | July 26 2024

The Top

• In Mexico, the trade balance recorded a cumulative deficit from January to June 2024, smaller than the one recorded in the same period of 2023.

• PCE inflation decreased in line with market consensus expectations.

• Former President Barack Obama and his wife Michelle endorsed Kamala Harris’s presidential candidacy on Friday during a private phone call between the couple and the current Vice President.

• This Friday, Paris will inaugurate the 2024 Olympic Games amidst strict security measures.

• Next week, monetary policy announcements will take place in the United Kingdom and Japan. According to Reuters surveys, it is likely that interest rates will remain unchanged in both cases.

• Oil prices fell on Friday and are on track for a third consecutive weekly decline, pressured by weak demand in China and hopes of a ceasefire agreement in Gaza that could ease tensions in the Middle East.

Economic Environment

In Mexico, the trade balance recorded a cumulative deficit from January to June 2024, smaller than the one registered in the same period of 2023. In June 2024, Mexico’s trade balance logged a deficit worth 1,037 million dollars, compared to a surplus of 58 million dollars in the same month of 2023. In June 2024, exports logged an annual increase of 5.7%, reflecting a 4.4% decrease in non-oil exports and a 26.8% increase in oil exports. Within non-oil exports, those directed to the US fell by 5.3% year-on-year, and those to the rest of the world fell by 0.1%. Imports recorded a negative reading of 3.6% year-on-year in June 2024, due to declines of 1.8% in non-oil imports and 26.3% in oil imports. By type of goods, imports of consumer goods decreased by 4.8%, intermediate goods by 3.1%, and capital goods by 5.6%. Thus, in the first half of the year, the trade balance logged a deficit worth 5,498 million dollars, compared to the deficit worth 6,505 million dollars in the same period last year.

PCE inflation decreased in line with market consensusexpectations. In the US, personal disposable income and personal consumption expenditures increased by 0.2% (previously 0.4%) and 0.3% (previously 0.4%) respectively,in June, showing that consumption increase to grow in the world’s largest economy. The annual personal consumption expenditure (PCE) inflation, an indicator for the Federal Reserve’s inflation target, decreased from 2.6% in May to 2.5% in June 2024, in line with market expectations. Within the index, service prices increased by 3.9%, energy prices by 2.0%, food prices by 1.4%, and goods prices fell by 0.2%. The core index stood at 2.6% in June, the same level as a month earlier. On a monthly basis, PCE inflation rose by 0.1% in June, while its core component saw a slight increase of 0.2%. Looking ahead, the Cleveland Fed Nowcastingmodel estimates that CPI inflation will set at 3.0% and PCE inflation at 2.5%, both for July.

Markets and Companies

Main stock indices in the US are trading higher, digestingthe personal consumption expenditure (PCE) inflation figure, which stood at 2.5% in June, in line with expectations. This supports the expectation that the Federal Reserve may cut its benchmark interest rate in September. Throughout the week, the stock market showed volatile trends, with adjustments in mega-cap companies that have led the year’s rebound, and a rotation towards smaller-cap companies. Stocks like Nvidia, Alphabet, and Meta adjusted during the week. In Europe, markets are rebounding after declines in previous sessions, with the construction, materials, and mining sectors leading the gains.

In the debt market, the yield on the 10-year Treasury bond is retreating in reaction to the US inflation figure, standing at 4.20%.

In Mexico, the IPC is trading lower and stands at 52,630.8 points.

The peso-dollar exchange rate is at 18.39 after closing at 18.45 yesterday.

In 2Q24, OMA reported a 2.5% drop in aeronautical revenues, mainly due to lower passenger traffic. Domestic TUA decreased by 4.3% and international TUA increased by 2.2%. Non-aeronautical revenues, on the other hand, advanced 13.8%. Profit margins were affected by higher concession rights payments.

In 2Q24, Fibra Macquarie reported a 5.0% y/y increase in revenues, while funds from operations (FFO) decreased by 0.8% y/y.

Corporate News

• The CEO of CrowdStrike reported that about 97% of Windows sensors have returned to normal functioning after last week’s service disruption.

• Shares of 3M rose as the company reported better-than-expected quarterly results.