The Day at a Glance | November 10 2022

The Top

*Surprising downwards inflation in the United States.

*The Central Bank of Mexico will make a monetary policy decision this afternoon; a 75bp increase is expected (10%e.).

*The United States Senate´s majority will depend on three states: Georgia, Arizona and Nevada.

*We will do whatever is necessary to control inflation, it´s too early to think of an inflection point in the increasing rates cycle: Neel Kashkari, Minneapolis FED.

*New loans in China decreased more than expected.

*Diesel prices in the US increased due to low fuel inventories.

*Ukrainian forces advance in the southern part of the country after Russia announced its retreat.

Economic environment

Inflation decreased. The most recent inflationary figure in the US surprised with a greater than expected slowdown in prices, after a 0.4% monthly (0.6%e.) and 7.7% annual (8%e.) increase. Concerning underlying inflation, prices also slowed down more than expected as they logged a 0.3% monthly (0.5%e.) and 6.3% annual (6.5%e.) rise. Goods decreased (-) 0.4% during the month in light of important decreases in used vehicles (-2.4% monthly) and clothing (-0.7%). In services, inflation became more moderate and increased 0.5% monthly after a decrease was logged in medical services (-0.6%) and transportation services increased at a slower pace (0.8%); housing prices increased 0.8% monthly. Lastly, energy prices logged their first increase in 4 months after logging a 1.8% monthly rise, while food prices increased at a more moderate pace (0.6% monthly). The data confirmed an overall slowdown in inflation, which suggests that prices are starting to move towards the FED´s expected trend, although it´s likely that one month´s data will not be enough to convince the central bank´s members to stop the increasing rates cycle. Markets reacted positively, with greater appetite for risk, a weaker dollar and lower market rates (especially in the short and middle part of the curve). The data could back a 50bp increase in the FED´s December meeting, which would be a slower hike with respect to the last four 75bp increases.