The Day at a Glance | November 7 2024

The Top

• October’s headline inflation shows that services inflation fell below 5.0% for the first time in over two years. 

• Retail sales in the Eurozone increased at an unexpectedly high rate in September.

• Today at 1:00 pm, the Federal Open Market Committee will release its November monetary policy announcement, where a 25-basis-point rate cut is expected, bringing the federal funds rate to a range of 4.50% to 4.75%.

• China’s exports grew at their fastest pace in over two years in October, as factories rushed sales to major markets in anticipation of new tariffs from the US and the European Union, with the threat of a two-front trade war gaining momentum.

• China will continue implementing supportive monetary policy to help foster a sustained economic recovery, said Pan Gongsheng, Governor of the People’s Bank of China.

• The Bank of England lowered its benchmark rate by 25 basis points to 4.75% in its November decision, aligning with the consensus, marking the second rate cut in four years following the start of its easing cycle in August.

• Oil prices fell on Thursday, extending a sell-off triggered by the US presidential elections, as a strong dollar and lower crude imports in China offset supply risks posed by a Trump presidency and production cuts caused by Hurricane Rafael.

Economic Environment

October’s headline inflation shows that services inflation fell below 5.0% for the first time in over two years. INEGI reported that the National Consumer Price Index for October recorded a monthly 0.55% change, slightly below our estimate of 0.59% and above the market consensus forecast of 0.52%. Annually, headline inflation set at 4.76%in October. Meanwhile, core inflation—which excludes the most volatile items like energy, agricultural products, and government-regulated prices—rose 0.28% m/m in October, below our estimate and the consensus forecast at 0.33% m/m and 0.32% m/m, respectively. Annually, core inflation stood at 3.80% in October. By components, goods increased by 0.24% m/m and 2.81% y/y, while services rose by 0.32% m/m and 4.98% y/y. Meanwhile, non-core inflation increased 1.46% m/m and 7.68% y/y. Overall, inflation figures were favorable, as, for the first time in over two years, services inflation came in below 5.0%, and goods inflation remained below the 3.0% target. Expectations for lower inflation going forward seem to be gaining traction.

Eurozone retail sales increased at an unexpectedly high rate in September. In September, retail sales rose by 2.9% y/y (1.5%e), following a 2.4% y/y increase in August. This marks three consecutive months of growth for the indicator. Within retail sales, food sales increased by 0.2% y/y (1.2% prev.), while non-food stores rose by 5.3% y/y (2.4% prev.) and gas stations by 2.2% (4.8% prev.). Within the main economies of the European block, sales in France rose by 3.4% y/y (prev. 5.0%), in Germany by 3.9% y/y (prev.2.1%), and in Spain by 4.3%. Overall, retail sales across the European block increased at an unexpectedly high rate in September, even after a significant upward revision in the previous month’s data, adding to the notion that private consumption may finally be starting to rise.

Markets and Companies

US stock futures continue to rise following the strong post-election momentum after Donald Trump’s presidential victory. Today, investors are focused on the Federal Reserve’s monetary policy decision, where a 25-basis-point rate cut is expected. Fed Chair Jerome Powell will hold a press conference following the announcement. Meanwhile, European markets are trading higher as they process Trump’s win and the Bank of England’s decision to cut its reference rate by 25 basis points. In Asia, markets had mixed performance, with China leading gains after a better-than-expected exports report for October. 

In commodities, oil prices are down, extending declines triggered by the US presidential election. Concerns over the possible reinstatement of sanctions on Iran and Venezuela under Trump’s administration, as well as a hurricane in the Gulf of Mexico, are impacting oil prices. Meanwhile, gold is trading at $2,681.85 per ounce as markets await the Fed’s rate decision.

US Treasury yields were slightly down after a strong increase spurred by Trump’s electoral victory. The 10-year yield is at 4.43%, while the 2-year yield stands at 4.24%. Meanwhile, IPyC futures are trading higher at 52,018 points, and the exchange rate is at 19.81 pesos per dollar, after closing at 20.09 yesterday.

America Movil announced that it has received a new ruling from the Federal Telecommunications Institute (IFT) regarding the third biennial review of the asymmetric measures imposed in 2014 on its subsidiaries Telcel, Telmex, and Telnor, among others. The new measures include extending national roaming service for five years in certain areas, requiring unlocked devices, and eliminating minimum contracts for non-corporate users. AMX anticipates challenging this ruling.

Volaris reported its October passenger traffic. Total ASM´s dropped by 6.8% y/y, primarily driven by the domestic segment (-13.1%), while the international segment logged a 3.9% increase. Domestic passenger traffic declined by 9.2%, while international traffic rose by 1.3%, leading to an overall 6.2% decrease in traffic. Total load factor dropped by 2.1 ppy/y.

Corporate News

• Warner Bros. Discovery reported its 3Q24 results, with a 4% drop in revenue; however, its subscriber base reached 110.5 million.

• Biotech company Moderna benefited from higher-than-expected sales of its COVID-19 vaccine, coupled with a strong cost-cutting strategy, surpassing revenue expectations.

• After experiencing significant gains following Trump’s victory, shares of Trump Media & Technology were down by nearly 14% at market open.