The Day at a Glance | September 24 2024

The Top

• In Mexico, inflation for the first half of September slowed to 4.66%.

• On Tuesday, China’s Central Bank announced its largest stimulus package since the pandemic to lift the economy out of its deflationary crisis and help it get back on track towards the government’s growth target. However, analysts warned that more fiscal aid was crucial to achieving these goals.

• US President Joe Biden will address the UN General Assembly on Tuesday for the last time as president, still facing the challenges posed by the wars in Ukraine and the Middle East.

• Germany’s leading economic institutes have downgraded their growth forecasts and now expect Europe’s largest economy to contract by 0.1% in 2024.

• Bank of Japan Governor Kazuo Ueda said they could afford to take time to observe developments in financial markets and foreign economies when setting monetary policy, suggesting that the central bank is in no rush to further raise interest rates.

• On Tuesday, oil prices rose more than 2% amidstnews of monetary stimulus from China, the top importer, and concerns that the conflict in the Middle East could affect regional supply, as another hurricane threatens supply in the US, the world’s largest oil producer.

Economic Environment

In Mexico, inflation for the first half of September slowed to 4.66%. INEGI reported that the National Consumer Price Index for the first half of September loggeda biweekly 0.09% change, below our estimate and the consensus forecast, which expected 0.27% and 0.14%figures, respectively. On an annual basis, general inflation inthe first half of September set at 4.66%, lower than the previous 4.83% figure. Meanwhile, core inflation, which excludes the most volatile items, like energy, agricultural products, and government-regulated prices, increased by 0.21% in the first half of September, slightly above our estimate (0.19%) and in line with the consensus forecast (0.21%). On an annual basis, core inflation stood at 3.95% in the first half of September, down from 4.01% in the second half of August. By components, goods set at 2.94% year-over-year (2.97% previously) and services at 5.15% year-over-year (5.26% previously). Regarding the more volatile items, or non-core inflation, the annual figure set at 6.73% (7.27% previously). The inflation figure for the first half of September is consistent with expectations of funding rate cuts on Thursday, September 26^th. We estimate a 25 basis point cut.

Markets and Companies

Main stock indices in the US began trading with a positive tone, setting the stage to close September with gains. The market has been driven by the start of an interest rate cut cycle after the Federal Reserve announced a 50-basis point reduction in its benchmark rate last week. For the remainder of the year, the market is pricing in an additional 50-basis point cut. Lower interest rates reinforce the expectation that the US economy could face a more moderate slowdown.

In Asia, markets recorded positive figures in response to the announcement that the Central Bank of China will implement additional stimulus measures. 

In the debt market, Treasury bond yields are rising. The 10-year bond is trading at 3.79%, and the 2-year bond at 3.59%.

In commodities, oil prices are climbing, reacting to the stimulus measures announced in China, the worsening conflict in the Middle East, and the possibility that Hurricane Helen could affect production in the US.

In Mexico, the IPC is up and is trading at 52,737.6 points.

Regarding the peso-dollar exchange rate, it´s trading at 19.34 after closing at 19.42 yesterday.

Fibra Prologis announced the acquisition of an industrial park with eight buildings located in Mexico City for a total purchase price of US$190.1 million, including closing costs. The buildings cover 1.5 million square feet of industrial space.

Corporate News

• Visa shares were down after it was revealed that the Department of State might launch an investigation into monopolistic practices in its debit card business.