The Day at a Glance | October 8 2024

The Top

• The Citibanamex Survey anticipates that the Central Bank of Mexico will cut the funding rate by 25 basis points in November.

• On Tuesday, China’s government stated that it is fully confident in achieving its 5.0% growth target for 2024 but refrained from introducing stronger fiscal measures, disappointing investors who had hoped for more substantial support from authorities to get the economy back on track.

• Germany’s industrial production increased more than expected in August (2.9% vs. 0.8%e) compared to the previous month, thanks to a rise in the automotive industry´s output. 

• Inflation-adjusted wages in Japan fell in August, while household spending also declined. However, analysts mentioned that underlying trends point to a gradual recovery in wages and consumption, which should support the central bank’s plans for additional rate hikes.

• On Tuesday, Hurricane Milton weakened and is now a Category 4 storm but is expected to regain strength and is heading toward Florida’s Gulf Coast, where over 1 million people have been ordered to evacuate.

• On Tuesday, the price of oil hesitated as market awaits Israel’s response to last week’s Iranian rocket attacks, which caused a spike in prices amidst concerns over a broader conflict in the Middle East.

Economic Environment

The Citibanamex Survey anticipates that the Central Bank of Mexico will cut the funding rate by 25 basis points in November. The Citibanamex survey´s consensus forecasts a 0.09% monthly increase in September´s general inflation and a 0.31% rise in the core component; for October, estimates are set at 0.45% for general inflation and0.31% for the core component. For the next 12 months (Sep/Sep) and on an annual rate, inflation is expected to set at 3.80%. By the end of the year, expectations for headline and core annual inflation stand at 4.44% (previous 4.55%) and 3.80% (previous 3.90%), respectively. For 2025, estimates are set at 3.81% (previous 3.80%) and 3.70% (previous 3.70%), respectively. Regarding the funding rate, it is expected to close 2024 at 10.0% (previously 10.0%), and analysts anticipate that the Central Bank of Mexico´s next move will be a 25 basis point cut in its next meeting scheduled for November. The exchange rate is expected to close 2024 at 19.67 pesos per dollar and 2025 at 19.95 pesos per dollar. Real GDP growth for 2024 is forecasted at 1.5% (previously 1.5%) and for 2025 at 1.2% (previously 1.3%).

Markets and Companies

Main stock indices in the US started trading with mixed figures following yesterday’s adjustment. Last week, the positive highlight was strong US job creation data, which reduced concerns about an economic slowdown. However, this also led investors to temper their expectations regarding the pace of interest rate cuts by the Fed. In Asia, mixed figures were logged; in China, the CSI index rose significantly as trading resumed after the holiday, although gains moderated later in the session. In Hong Kong, the stock market declined. 

In the bond market, Treasury yields maintained the gains seen since the previous week in reaction to the non-farm payrolls data. The 10-year bond is trading with a yield of 4.05%, while the 2-year bond is at 4.0%.

In commodities, oil prices are retreating, taking a breather after the rises logged in previous weeks due to escalating tensions in the Middle East. Meanwhile, gold is recording a slight decline but remains close to its highs, at $2,640 per ounce.

In Mexico, the IPC opened lower and is trading at 52,007.8 points.

Regarding the peso-dollar exchange rate, it is trading at 19.33 after closing at 19.27 yesterday.

OMA reported a 5.2% year-over-year decrease in passenger traffic during September. Domestic passenger traffic decreased by 7.1%, while international passenger traffic increased by 10.5%. 

ASUR announced that in September, passenger traffic at its airports fell by 1.5% year-over-year. By country, the changes were: Mexico -8.1%; Puerto Rico -0.8%; and Colombia +14.7%.

Corporate News

• Shares of Super Micro Computer were rising as the company announced the development of over 100,000 graphics processing units, which are essential for AI development. Nvidia’s shares were up following a statement from Foxconn’s chairman, who noted that the AI boom still has more room to grow.