The Day at a Glance | June 27 2024

The Top

The trade balance recorded a cumulative deficit from January to May 2024, which was lower than the deficit recorded in the same period of 2023. 

• The labor market in Mexico remains very strong, according to figures from the National Occupation and Employment Survey. 

• This afternoon, the monetary policy announcement from the Central Bank of Mexico will be released; we expect the funding rate to remain unchanged at 11.0%. 

• Democratic President Joe Biden and his Republican predecessor, Donald Trump, face off this Thursday in a highly anticipated debate that offers voters a focus on the two candidates. 

• The US economy expanded by 1.4% annualized in the first quarter of 2024, slightly higher than the second estimate (1.3% annualized). 

• The number of unemployment insurance claims in the US dropped from 239,000 to 233,000 in the week ending June 22^nd. 

• Amazon reached an all-time high, surpassing $2 trillion in market capitalization for the first time.

Economic Environment

The trade balance recorded a cumulative deficit from January to May 2024, which was lower than the deficit recorded in the same period of 2023. In May 2024, Mexico’s trade balance posted a surplus of 1.991 billion dollars, compared to a deficit of 99 million dollars in the same month of 2023. In May, we observed an increase in exports, which logged an annual expansion of 5.4%, due to a 4.8% increase in non-oil exports and a 15.7% increase in oil exports. Within non-oil exports, those directed to the USincreased by 6.6% annually, while those directed to the rest of the world decreased by 4.0%. Imports recorded a 1.4% year-over-year figure in May 2024, resulting from a 3.5% rise in non-oil imports and a 22.9% decrease in oil imports. By type of imported good, consumer goods increased by 2.7%, intermediate-use goods by 0.3%, and capital goods by 8.0%. Thus, in the first five months of 2024, the trade balance logged a deficit worth 4.461 billion dollars, compared to a deficit of 6.563 billion dollars in the same period of the previous year. The trade balance figures reveal that a significant part of the trade surplus came from a substantial drop in oil imports, which in turn reduced the oil trade deficit. Therefore, our estimate of a 9 billion dollar deficit for the whole year seems high, especially considering that the trade deficit over the last 12 months is close to 4 billion dollars.

The labor market in Mexico remains very strong, according to figures from the National Occupation and Employment Survey. In May 2024, and according to original figures, the economically active population (EAP) in Mexico was 61.4 million people aged 15 and over, 59.8 million of which were employed (32.6 million in the informal sector) and 1.6 million were unemployed or worked less than one hour. Compared to May 2023, the employed population increased by 1.6 million people. Additionally, the unemployment rate, measured as the unemployed population among the EAP, was 2.6%, unchanged from May 2023, according to seasonally adjusted figures. As of May, datasuggests that the labor market in Mexico remains very strong, with high job creation and very low unemployment. However, going forward, we do not rule out that it may weaken, especially amidst an environment characterized byeconomic moderation.

Markets and Companies

Global markets carry mixed sentiment. Main US indices closed yesterday’s session with gains. Today, they are in mixed territory: the S&P is up +0.09%, the Nasdaq +0.16%, while the Dow is down -0.02%. Meanwhile, the yield on the 10-year Treasury bond stands at 4.28%. In Europe, the Euro Stoxx index is up +0.07% with most sectors and major stock exchanges trading in mixed territory; oil and gas stocks rose +0.48%, while the retail sector fell -1.49%. In Asia, Japan’s Nikkei 225 fell -0.82%, ending the day at 39,341.54. China was down and closed at 2,945 (-0.90%). In Mexico, the IPC is down and stands at 52,315.9 points (-0.29%). Oil prices are up as fears of war between Israel and the Iran-backed militia, Hezbollah, overshadow weak gasoline demand in the US; the price is $81.39 per barrel. Gold is up +1.1%, standing at $2,322 per ounce. Silver is trading at $29.02 per ounce (+0.9%) and copper at $4.38 per pound (+0.3%). Lastly, cryptocurrencies are up.

After yesterday´s trading session, the exchange rate fluctuated between a low of 18.15 and a high of 18.43, currently trading at 18.42.

Corporate News

Corporate News

• Walgreens Boots Alliance plummeted 20.3% after lowering its annual revenue outlook. Shares have fallen 41% since the stock was dropped from the Dow just four months ago. Over a two-year period, the stock has lost 70% of its value.

• Micron shares fell more than 5% after issuing revenue guidance in line with consensus estimates.

• Levi Strauss fell 14% after the latest quarterly revenue from the jeans manufacturer was lower than expected.