The Day at a Glance | November 21 2024

The Top

• Retail sales in Mexico logged a slight recovery in September.

• The Citibanamex survey consensus estimates a 25-basis-point cut in the benchmark interest rate before the end of 2024.

• Chinese government officials recommend that Beijing set an economic growth target of around 5.0% for next year, advocating for stronger fiscal stimulus to counter the anticipated impact of US tariff hikes on the country’s exports.

• In the week ending November 16^th, initial unemployment insurance claims in the US stood at 213,000 (compared to an expected 220,000), marking a decline of 6,000 from the previous week’s 219,000.

• Bank of Japan Governor Kazuo Ueda stated that the central bank will examine various data ahead of its rate review next month, considering the impact of yen movements on economic and price outlooks.

• Oil prices rose by over 2% on Thursday as Russia and Ukraine exchanged missile strikes, overshadowing the effect of a larger-than-expected increase in US crude inventories.

Economic Environment

Retail sales in Mexico logged a slight recovery in September. According to INEGI, retail sales increased by 0.1% m/m in September, following a 0.1% m/m rise in August and a 0.6% m/m increase in July, based on seasonally adjusted figures. On an annual basis, and according to original data, sales declined by -1.5% in September, below the market expectation of a -1.2% drop. Within the annual figures, online and catalog sales rose 16.1%, while supermarket and department store sales contracted by -2.1%. Meanwhile, grocery, food, and beverage sales increased by 3.6%. Overall, retail sales recorded a slight improvement; however, six of the nine components recorded annual declines, limiting the recovery’s reach across consumption categories.

The Citibanamex survey consensus forecasts a 25-basis-point cut in the benchmark interest rate before the end of 2024. The survey also anticipates a 0.48% increase in headline inflation and a 0.17% rise in core inflation for the first half of November. For November as a whole, it expects a 0.60% m/m increase in headline inflation and a 0.19% m/m rise in core inflation. Over the next 12 months (Nov/Nov), annual inflation is projected to reach 3.82%. By year-end, expectations for headline and core inflation are 4.45% (previously 4.41%) and 3.75% (previously 3.80%), respectively. For 2025, estimates are set at 3.80% (previously 3.81%) and 3.70% (unchanged), respectively. The benchmark interest rate is expected to close 2024 at 10.0% and 2025 at 8.0%. The exchange rate is projected to end 2024 at 20.00 pesos per dollar and 2025 at 20.50 pesos per dollar. Real GDP growth forecasts remain at 1.5% for 2024 and 1.0% for 2025.

Markets and Companies

In the US, futures for major indices posted slight gains following Nvidia’s third-quarter earnings report. While the semiconductor company’s results exceeded expectations, concerns remain over a potential slowdown in its revenue growth. Later in the day, investors will focus on initial jobless claims data.

In Europe, markets were mostly positive, supported by encouraging announcements from Zurich Insurance. Meanwhile, in Asia, markets closed mixed, and in India, the Adani Group conglomerate faced fraud accusations.

In the commodities market, ongoing tensions between Russia and Ukraine have driven up oil prices. Analysts speculate that OPEC+ may adjust production levels in December. Meanwhile, gold prices remain steady at $2,665 per ounce.

US Treasury yields for 2-year and 10-year bonds stand at 4.30% and 4.39%, respectively, as the market awaits economic data and comments from Federal Reserve officials.

In Mexico, IPyC futures are logging gains, reaching 50,413.0 points. The exchange rate stands at 20.35 pesos per dollar, up from yesterday´s 20.28 at market close. 

Grupo Elektra announced that the Federal Tax and Administrative Court granted a provisional injunction instructing the National Banking and Securities Commission (CNBV) to maintain the suspension of ELEKTRA stock trading until the case is resolved.

Corporate News

• Nvidia reported a 94% y/y revenue increase, surpassing expectations. However, investors remain cautious, noting annual growth rates of 122% and 262% in 1Q24 and 2Q24, respectively.

• Cloud storage company Snowflake delivered better-than-expected results, with revenues of $942 million (vs. $897m est.). The company forecasts a 29% y/y revenue increase for fiscal year 2025.

• Bitcoin broke the $98,000 threshold, boosting related companies like MicroStrategy and Coinbase.