The Day at a Glance | November 20 2024

The Top

• The Timely Indicator of Economic Activity (IOAE) anticipates that the economy will continue to slow down in the last quarter of 2024.

• The Federal Reserve is expected to implement one more rate cut to the federal funds target range before the end of 2024 and close to three additional cuts in 2025, according to a Reuterssurvey conducted with around 100 US economists from November 12^th to 20^th. 

• China kept its benchmark interest rates unchanged on Wednesday, following last month’s larger-than-expected rate cuts by lenders aimed at reviving economic activity.

• UK inflation rose from 1.7% in September to 2.3% in October, exceeding the Bank of England’s 2.0% target, highlighting why the central bank is proceeding cautiously with cuts to its key interest rate.

• Japan’s exports expanded faster than expected in October, driven by a rebound in demand for chips from China, although concerns persist over potential US trade protectionist policies that could hinder future shipments.

• Oil remained steady for a second day, as concernsabout an escalation in the Ukraine war—potentially disrupting Russia’s oil supply—offset data showing increased US crude inventories.

Economic Environment

The Timely Indicator of Economic Activity (IOAE) anticipates that the economy will continue slowing in the last quarter of 2024. As a nowcasting tool for the Global Indicator of Economic Activity (IGAE for its acronym in Spanish), the IOAE estimates that Mexico´s economy grew by 0.3% y/y in September and 0.4% y/y in October 2024, based on seasonally adjusted figures.

By components, industrial production, which includes construction, manufacturing, electricity generation, and mining, stagnated in September and is estimated to contract by -1.3% y/y in October. In the services sector, the IOAE forecasts growth of 0.4% y/y in September and 1.1% y/y in October.

On the margin, this would result in monthly declines of -0.2% m/m in September and -0.1% m/m in October in the IGAE, also based on seasonally adjusted data. Thus, incorporating the IOAE’s growth estimates into the IGAE suggests that the economy will continue to slow down in the fourth quarter of 2024, likely growing slightly below 1.0% y/y.

Final figures for third-quarter GDP and September’s IGAE will be released on Friday.

Markets and Companies

US futures are trending higher. Wall Street is gearing up for Nvidia’s quarterly earnings, which will be released after the market closes. With the chipmaker’s market capitalization at $3.6 trillion, its results could be more impactful than some key economic reports, setting the tone for the S&P 500 and Nasdaq this week and heading towards the end of 2024. 

In Europe, markets are trading higher as investors monitor rising tensions in the Ukraine-Russia war. The Stoxx 600 was up 0.5% by midday, with most sectors in positive territory.

Meanwhile, in Asia, markets mostly closed lower as China kept interest rates unchanged and investors assessed Japan’s trade data.

Regarding commodities, oil remains largely unchanged. Concerns over escalating hostilities in the Ukraine war, which could disrupt crude supplies from Russia, offset data showing an increase in US crude inventories.

Metals and cryptocurrencies are logging mixed movements. 

In Mexico, IPC futures remain practically flat (-0.01%).

The exchange rate stands at 20.25 after closing at 20.10 yesterday.

Corporate News

• Target shares fell more than 17% after the retailer missed third-quarter earnings and revenue estimates and lowered its annual guidance, just three months after raising it. Target attributed this performance to a slight increase in customer traffic, while its CEO pointed to “persistent weakness in discretionary categories.”

• Dolby Laboratories shares surged nearly 15% after the audio technology company’s quarterly results exceeded Wall Street estimates.