Weekly Summary

Most Outstanding Points of the Week

• In the US, the Fed left the federal funds rate range unchanged at 5.25% – 5.5%, as widely expected. However, it reaffirmed that there will be three 25bp cuts in the remainder of the year.

• In the United States, the main economic indicators that stood out were the good results of the real estate sector in February.
   
• In China, retail sales grew 5.5% annually, exceeding expectations of 5.2%. On the other hand, industrial production increased by 7%, and exceeded estimates.
   
• For the first time in three years and in line with market expectations, the Bank of Mexico cut the reference rate by 25bp to 11%.

Important Events in the Coming Weeks

• In the U.S., consumer confidence will be known 03/26
• In the U.S., the 4Q23 GDP to be published 03/28

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Most Outstanding Points of the Week

• In the United States, February’s inflation advanced 0.4% in the month, reaching an annual rate of 3.2% from 3.1% in January and the 3.1% expected.

• In the United States, the FED’s monetary policy announcement will take place next week and the consensus indicates that there will be no change in the federal funds rate.
  
• In China, after four months of deflation, inflation accelerated in February by 0.7% annually. 

• A deputy governor of the Bank of Mexico stated that there is room to adjust the reference rate ahead of the next meeting on March 21st.

Important Events in the Coming Weeks

• In the U.S., there will be a monetary policy announcement from the FED 03/19 – 20
• In the U.S., housing sector indicators to be released 03/19 – 21

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Most Outstanding Points of the Week

• In the United States, the February nonfarm payroll rose in 275,000 jobs, exceeding the 200,000 job expectation. Meanwhile, the unemployment rate rose to 3.9% from 3.7%. 

• In the United States, Jerome Powell told legislators that interest rate cutbacks will depend largely on the direction of the economy.
  
• In China, the government announced a growth target for this year of “around 5%” and the issuance of special bonds for large projects.

• In Brazil, the debt to GDP ratio rose to 75% in January, an increase of 70 basis points from December. This increase was due to the impact of accrued interest on debt.

Important Events in the Coming Weeks

• In the United States, February’s inflation to be announced 03/12
• In the U.S., industrial production will be published. 03/15

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According to JP Morgan’s monitoring, both headline and core global inflation, excluding China and Turkey (where China is experiencing deflation and Turkey has a double-digit inflation rate), increased slightly by 0.3% on a monthly basis in January. While their annual variations continued to decline, headline inflation rebounded to 2.6% in the last three months up to January. Core inflation (excluding volatile components such as food and energy) also saw a slight increase, reaching 3%.

U.S. core goods prices, excluding autos (e.g., apparel, electronics, furniture, etc.), rebounded by 0.16% monthly in January, indicating the end of global goods price deflation in the first half of 2024. Another interesting point to note is that container shipping costs have surged by 150% since the beginning of December. However, supplier lead times still remain near historical levels, suggesting limited impact so far due to geopolitical tensions in the Middle East. Additionally, oversupply in China continues to exert downward pressure on manufactured goods prices.

Furthermore, there was a 0.5% monthly increase in services prices, driven by a 0.7% increase in the United States. Core services (e.g., shelter, medical services, education, etc.) increased by 0.46% on a monthly basis, marking their largest increase since December 2022, pushing the annual rate for the last quarter above the 4-4.5% range. Much of this rebound was attributed to the increase in the United States, reaching an annual rate of 6.2%, while services inflation in developed countries, excluding the U.S., remained stable at 3% annually. Particularly noteworthy was the continued pressure on shelter costs in the United States.

Global food inflation remained stable at close to 3.5% annually, although food inflation in emerging markets accelerated to 6.5% annually. The latter was due to a spike in the weather phenomenon known as “El Niño,” causing localized increases in fresh food prices in Mexico and Brazil.

With this mix of factors, core inflation (a metric of particular interest to central banks) at the global level is expected to rebound to 3.3% in the first quarter of 2024, compared to 3% in the fourth quarter of 2023. In this context, conditions suggest that monetary authorities, especially within developed countries, may temporarily postpone interest rate cutbacks, pending clearer signals of more significant cooling in key categories such as essential services and housing.

 Global Consumer Price Index (CPI) headline and core (excluding China-Turkey), monthly variation (%)

• The dotted lines refer to the three-month moving average. 

Source: JP Morgan

Most Outstanding Points of the Week

• In the United States, the second estimate of the 4Q23 GDP showed an annualized growth of 3.2%, slightly lower than the first revision of 3.3%.
   
• In the United States, the PCE index, a key inflation metric for the Fed, advanced 0.4% in January. This brought the annual rate to 2.8% and was in line with expectations.
   
• In China, manufacturing activity contracted for the fifth consecutive month during February.

•  The Bank of Mexico downgraded its growth estimate for this year from 3% to 2.8%, due to the slowdown observed in the economy in the last quarter of 2023.     

Important Events in the Coming Weeks

• In the United States, ISM services and Beige Book will be published 03/5-6
• Employment figures to be released in the United States 03/08

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Most Outstanding Points of the Week

• In the United States, in virtually the last week of quarterly reports, reflecting an 82% advance, 77% of companies have posted better than expected earnings.

• In the U.S., the FED’s minutes expressed the concern of most of its members about cutting back interest rates too soon.
  
• In China, the People’s Bank cutback the 5-year reference rate by 25bp to 3.95% for the first time since June.
  
• In Mexico, inflation in the first half of February decelerated to 4.45% annually, from 4.87% in January, and was better than the 4.7% estimate.

Important Events in the Coming Weeks

• In the United States, consumer confidence will be known 02/27
• In the United States, various real estate sector indicators will be published 02/26-29

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Most Outstanding Points of the Week

• In the United States, inflation in January increased by 0.3% for the month, reaching an annual rate of 3.1% (compared to the expected 2.9%).

• In the United States, as we head into the final stretch of the 4Q23 quarterly reporting season, there has been 72% progress, with 78% of the sample outperforming on earnings and 52% outperforming on sales.
  
• In China, there were no activities during the week, mainly due to the celebration of the Lunar New Year.
  
• In Mexico, the government issued a decree to exempt PEMEX from paying taxes for a period of four months to support the company.

Important Events in the Coming Weeks

• In the United States, President’s Day will be celebrated and there will be no activities 02/19
• In the United States, the FED’s minutes will be released 02/21

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Most Outstanding Points of the Week

• In the United States, Jerome Powell reaffirmed that there will be no cut in the reference rate in March and urged patience. 
  
• In the United States, the 4Q23 quarterly reporting season has advanced 60%, in which 78% of the sample has published higher earnings than expected.

• In China, the securities regulator announced measures to stabilize the financial markets, highlighting the “zero tolerance” policy against short selling, insider trading and fraudulent share issuance.
  
• In line with expectations, the Bank of Mexico did not modify the reference rate above a maximum of 11.25%.

Important Events in the Coming Weeks

• In the U.S., inflation figures will be released 02/13
• In the United States, retail sales will be released 02/15

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Most Outstanding Points of the Week

• In the United States, in a decision widely anticipated by the market, the Federal Reserve (FED) again kept the federal funds rate range unchanged at 5.25% – 5.50%.
  
• In the United States, the 2023 fourth quarter reporting season is 37% complete, with 78% of the sample reporting higher than expected earnings.
  
• In China, the manufacturing PMI contracted for the fourth consecutive month in January, although positively in line with consensus forecasts.
  
• In Mexico, the IMF upgraded its economic growth forecast to 2.7% from 2.1% for 2024. This is due to the momentum of the U.S. economy, as well as the good performance of domestic demand.

Important Events in the Coming Weeks

• In the U.S., several members of the FED will hold speeches 02/5-7
• Inflation figures to be released in China 02/7

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Most Outstanding Points of the Week

• In the United States, the first revision of the 4Q23 GDP showed annualized growth of 3.3%, better than the estimate of 2%. Personal consumption advanced 2.8%, exceeding expectations of 2.5%.
  
• In the United States, the 4Q23 reporting season is about 25% ahead. So far, S&P 500 companies’ earnings are down 1.6% year over year (YoY). 
  
• In China, the People’s Bank announced that the reserve requirement of banks will be lowered by 50bp as of February 5, thereby providing liquidity of $1 trillion yuan (US$139.8bn).
  
• Throughout 2023, Mexico received US$43.9bn in Foreign Direct Investment (FDI) inflows. This implied a growth of 21% compared to 2022, as well as the highest figure since 2013. 

Important Events in the Coming Weeks

• In the U.S., there will be a monetary policy announcement from the FED 01/31
• Employment figures to be released in the United States 02/02

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