The Day at a Glance | Sep 13 2022

The Top

*Inflation in the United States slowed down less than estimated (0.1% monthly, 8.3% annual).

*The United States and Mexico expressed optimism in resolving the energy sector dispute.

*China calls on banks to report their exposure to the Fosun conglomerate, creating doubts about the company´s financial position.

*Mexico and the US will invest 4,900 million dollars in border infrastructure between 2022-2024.

*Xi Jingping will meet with Vladimir Putin this week.

Economic environment

Inflation in the United States decreased at a slower pace. The Consumer Price Index slowed down more than estimated by analysts and markets during August, by logging a 0.1% monthly increase (vs -0.1%e.) and decreasing moderately to an 8.3% annual rate (vs 8.1%e.). The big surprise was seen in underlying inflation, which set above estimates – a sign that inflationary pressures could be more persistent than anticipated. Month to month, the underlying component increased 0.6% (vs 0.3%e.) and rebounded to a 6.3% annual rate (vs 5.9% prev., 6.1%e.). Energy prices were the ones that contributed the most to the overall decrease and logged a (-) 5% monthly drop (gasolines -10.6%); but the rest of the components recorded increases. Food prices increased 0.8% and only logged a slight slowdown with respect to what was recorded in the previous 3 months; commodity prices increased at a 0.5% monthly rate (new vehicles 0.8%; used vehicles -0.1%) and services also increased during the month; they hiked 0.6%, with an important hike in the cost of living (0.7%) and medical services (0.8%), in addition to a recovery in transportation services (0.5%). The data challenges the idea that inflation will descend quickly towards 2023 and reinforces the FED´s message, which points out that it´s necessary to keep a tight monetary stance in order to reach stability in prices. Risky assets reacted negatively in light of this news. Concerning next week´s monetary policy decision, the consensus expects a 75bp interest rate increase, which would take the rate to 3%-3.25% in the United States.