During November, the recovery of the equity markets that began in mid-October continued; the main stock indexes, the S&P 500 and the ACWI*, accumulated yields of 5.38% and 7.60%, respectively, during the period. Fixed Income markets enjoyed their best month of the year, with investment grade corporate bonds yielding 5.18% for the month. Finally, the strength of the Mexican peso continued to stand out, closing at 19.27 pesos per dollar, a level not seen since February 2020, and appreciating 6.14% for the year.

The month's positive performance resulted from the lower-than-expected inflation figure for the month of October. In that reading, headline inflation declined to 7.7% from its peak of 9.1% in June, while core inflation eased to 6.3% on the year from 6.6% the previous month. Another catalyst for the market was the speech by Fed Chairman Jerome Powell, who said that they have begun to see the desired effects of a tight monetary policy and gave certainty that the next rate hike will be 50bp and not 75bp as in his last four meetings. Consequently, the market today takes as a base scenario a terminal rate of 5% reached during the first quarter of 2023.

Turning to the rest of the world, the war between Russia and Ukraine continues with little likelihood of resolution in the short term. The European economies are preparing for an atypical winter, while the members of the G7 impose new sanctions on Russia, now based on a cap of 60 dollars per barrel on all crude oil exported from that region. This is aimed at weakening the country's public finances and limiting revenues that continue to finance the war. In China, on November 11, the State Council announced some easing of the zero COVID policies, which boosted the region's stock index to return 13.11% during the month. Finally, in the local market, Mexico's GDP for the current year was again revised upwards to 3.0%, while the Mexican Stock Exchange has remained one of the most defensive stock markets so far this year, with positive dollar returns, surpassed only by Brazil's stock market.

At Grupo Inversión we believe that volatility will continue in the first quarter of 2023 until there is greater certainty as to the maximum level for the interest rate.