The Day at a Glance | June 12 2024

The Top

• In the United States, CPI inflation remained unchanged in May. 

• Consumer inflation in China remained steady in May while producer prices fell at a slower pace.

• French President Emmanuel Macron urged rival parties from both sides of the political center to join him in forging a democratic alliance against Marine Le Pen’s far-right party, the National Rally, in the upcoming early legislative elections.

• According to a Reuters survey, the Bank of England would start cutting interest rates in August, with at least one more cut expected this year. 

• Oil prices rose on Wednesday after three key forecasters predicted that global oil inventories would fall in the second half of 2024.

• US indices are up after inflation data was released.

Economic Environment

In the United States, CPI inflation remained unchanged in May. The Bureau of Labor Statistics (BLS) released its consumer price inflation figures for May, logging no change, and set below the market estimate of 0.1% m/m and April’s 0.3% m/m. The flat growth recorded in May was due to a 3.6% m/m decline in gasoline prices, which was offset by a 0.4% increase in housing prices. Meanwhile, core inflation increased by 0.2% m/m in May, also below consensus expectations and April’s figure, both at 0.3% m/m. On an annual basis, general inflation stood at 3.3% (prev. 3.4%) and core inflation at 3.4% (prev. 3.6%). The surprise in the inflation data is good news for the Federal Reserve regardingits fight against inflation, as the probability of a cut in the federal funds rate range in September is increasing. 

Consumer inflation in China remained steady in May while producer prices decreased at a slower pace. China’s annual consumer inflation remained at 0.3% in May, below market expectations of 0.4% figure. Thus, inflation recordedyear-on-year growth. Regarding core inflation, it stood at 0.6% y/y in May. Meanwhile, producer inflation fell to -1.4% in May from the -2.5% logged in the previous month. This reading marked the twentieth consecutive month of contraction. Overall, May´s inflation figures suggest that theAsian giant´s economy may need more rounds of stimulus to boost domestic demand.

Markets and Companies

US indices are up after inflation data was released. The S&P 500 is up a day after the benchmark index closed at a new record level; the Nasdaq also closed at a record high on Tuesday. Today, main US indices are up after May´s inflation data was made known. Meanwhile, the yield on the 10-year Treasury fell again below 4.3% as concerns about inflation eased ahead of the end of the Fed’s two-day policy meeting on Wednesday. In Europe, markets are up after US inflation data came in slightly lower than expected. The Stoxx 600 was up 1.1% at 2:00 p.m. London time; banking stocks led gains, rising 1.4%. In Asia, markets were mixedas China’s May inflation rose for the fourth consecutive month; the inflation rate in May was 0.3%, not reaching the 0.4% figure forecasted by a Reuters survey. As for commodities, US crude oil extends its gains and trades above $78 while the Department of Energy forecasts a supply deficit this year. Metals and cryptocurrencies are up, and in Mexico, the IPC is up +0.87% and stands at 53,594 points.

After yesterday’s trading session, the exchange rate fluctuated between a low of 18.43 and a high of 18.94, currently trading at 18.94.

Corporate News

• Oracle, the cloud services company, rose nearly 8% after announcing agreements with Google and OpenAI. Oracle plans to make its database available on Google Cloud starting in November. It also plans to partner with Microsoft and OpenAI for additional computing capacity.

• Shares of Paramount Global fell -2.3% after National Amusements halted talks with Skydance about a proposed merger with Paramount.