The Day at a Glance | September 3 2024

The Top

• In Mexico, investment and consumption figures revealed that the economy slowed down rapidly in June. 

• The unemployment rate in Mexico stood at 2.9% in July, marking four consecutive months of increases from a low of 2.3% in March. 

• Later today, the ISM Manufacturing Index for August will be released, with the consensus forecasting a 47.5 point figure. 

• On Tuesday, China announced that it plans to initiate an anti-dumping investigation on canola imports from Canada, following Canada’s decision to impose a 100% tariff on Chinese electric vehicles. 

• Fed officials agree on the need to cut the federal funds rate in the upcoming September meeting, but their reasons vary, so the size of the cut will depend on data. 

• Brent prices fell by 2% on Tuesday as slow economic growth in China raised demand concerns, overshadowing the impact of halted production and exports in Libya.

Economic Environment

In Mexico, investment and consumption figures revealedthat the economy slowed rapidly in June. Gross fixed investment decreased -1.3% y/y in June, according to original data. Simultaneously, construction declined by -0.5% y/y, and machinery and equipment dropped by -2.2% y/y, also based on unadjusted figures. By sector, private investment decreased by -0.5% y/y, and public investment plummeted by -7.2% y/y. On a seasonally adjusted monthly basis, investment fell by -1.0% in June. Meanwhile, private consumption in Mexico reported an annual 0.4% y/y increase in June, according to original data. Within this, spending on imported goods rose by 2.4% y/y, while spending on domestic goods and services declined by -0.1% y/y. On a seasonally adjusted monthly basis, private consumption increased by 0.1% in June, after falling by -0.5% in May and -1.0% in April. Aggregate demand figures reveal that private consumption and investment slowed significantly during June, indicating that the economy cooled once the electoral period ended. In this regard, our expectation of a greater economic slowdown during the second half of the year seems to be gaining traction.

Markets and Companies

After yesterday’s holiday, the US stock market kicked offSeptember trading in negative territory. August was a volatile month for markets, though they ended up logging gains. This week, investors are focused on the release of non-farm payrolls for August, as this data could provide more clues about the magnitude of the Fed’s future interest rate cuts. In Europe and Asia, stock markets were trading in the red. 

In the debt market, Treasury bond yields recorded slight declines, with the 10-year bond trading at 3.84% and the 2-year bond at 3.88%. In recent weeks, the market has factored in expectations of the start of a rate-cutting cycle in the Fed’s September meeting, while this week’s employment data could provide more clarity on the pace of those cuts.

In commodities, oil prices were declining. According to media reports, OPEC+ is planning to increase production in October. Meanwhile, data from the Chinese economy suggest there was a slowdown in demand for crude oil. 

In Mexico, the IPC opened lower, trading at 52,450.3 points.

Regarding the peso-dollar exchange rate, it´s trading at 19.94 after closing at 19.81 yesterday.

América Móvil and Telefónica signed a non-binding agreement to jointly explore their potential participation in the sale process of the assets of WOM S.A., a Chilean telecommunications company currently undergoing a Chapter 11 reorganization process pending before the United States Bankruptcy Court.

Corporate News

• United States Steel shares declined after Kamala Harris expressed opposition to a potential sale of the company to Nippon Steel.

• Bank of America shares fell after it was revealed that Berkshire Hathaway sold part of its stock position in the company.