Trump and Dollar Policies

March 10, 2025 6:04 AM UTC

   The Trump administration could decide to more broadly talk the USD down or less likely try to reach a cooperative Mar A Lago accord with big DM and EM countries. A more cohesive alternative is a forced currency deal for countries to appreciate their currencies to avoid more tariffs and withdraw

Mexico: Uncertainty Mounts as Tariffs Are Imposed

March 5, 2025 2:43 PM UTC

Trump's administration has moved forward with 25% tariffs on Mexican imports, citing drug trafficking and migration issues. Mexico’s President Sheinbaum has stated retaliatory measures will be announced on March 9. The tariffs could push Mexico into recession in 2025, although we forecast growth a

Trump Latest Thinking

March 5, 2025 11:07 AM UTC

Bottom line: President Donald Trump signaled that he is committed to tariffs to raise revenue; bring production back to the U.S. and get fairer trade relations.  This three part approach will likely shape implementation of further product and reciprocal tariffs from April.  However, reports sugges

Central and Latin America: Country Risk Ratings

March 5, 2025 11:00 AM UTC

We provide country risk reviews for select Central and Latin America countries.  

Trump Tariffs: Bad for The U.S. Worse For Canada

March 4, 2025 3:48 PM UTC

When Trump announced 25% tariffs on Canada and Mexico in February, we put up a piece outlining the likely economic consequences, which became dated by the end of the day as Mexico and Canada won a one month delay in return for some concessions at the border. We are now recycling that story, with som

Trump Tariffs and U.S. Business and Consumer Sentiment

March 3, 2025 9:02 AM UTC

 •    Mexico and Canada are trying to frantically find solutions to delay across the board tariffs again, though the U.S. is hinting that the rate could be less than 25%.  China extra 10% tariff remains likely, as the U.S. increases trade pressure on China.  More tariffs also remain highly

Mexico: Labour Market Decelerating as Expected

February 28, 2025 5:53 PM UTC

Mexico's labor market remains strong with an unemployment rate of 2.7%, but signs of deceleration are emerging. Worker affiliation to the pension system and wage growth are slowing, and some job creation stagnation is expected, potentially pushing the unemployment rate above 3%. A technical recessio

Banxico Minutes: More Cuts on the Way

February 21, 2025 9:57 PM UTC

Banxico cut the policy rate by 50 bps to 9.5%, signaling a more dovish stance as inflation trends downward. The board cited weak domestic demand and improved inflation prospects but highlighted risks from U.S. policy uncertainty, tariffs, and immigration effects. While most members supported a 50 bp

Mexico: Tariffs and Growth Issues Could Impose Fiscal Difficulties

February 19, 2025 10:20 PM UTC

Mexico aims for fiscal consolidation in 2025, relying on revenue growth while freezing most expenditures. However, weak growth could undermine this strategy. Authorities expect 2–3% GDP growth, but our forecast is 1.6%, with a recession risk. A less integrated U.S.-Mexico trade relationship, parti

Reciprocal Tariffs and Reducing Bilateral Trade Imbalances

February 17, 2025 10:28 AM UTC

·       President Trump’s executive order on reciprocal tariffs has not produced much market reaction, both as the proposals will not be delivered to the president until April 1 and the process of Commerce/U.S. Treasury and Homeland Security input is seen reducing the odds of penal tariffs.

Trump’s Tariffs: Steel Then Reciprocal and Then Cars

February 11, 2025 1:23 PM UTC

 The 25% Steel and Aluminum tariff could have small to modest adverse inflation and GDP growth impacts on the U.S., but the prospect of reciprocal and more product and country tariffs create trade policy uncertainty/supply chain disruption and paperwork problems.  This could amplify the impact of

Mexico CPI Review: Inflation Falls as Demand Eases

February 10, 2025 7:14 PM UTC

Mexico’s CPI rose 0.3% in January, below its 0.6% historical average but in line with expectations. Y/Y inflation fell to 3.6%, the lowest since Jan/2021. Core CPI rose 0.4%, with core goods up 0.7% and services up 0.2%. Non-core CPI fell 0.13%, led by a 1.5% drop in agricultural goods. The econom

Banxico Review: 50 bps Cut as Expected

February 8, 2025 9:39 PM UTC

Banxico cut the policy rate by 50bps to 10.5%, with a cautious stance and a split vote. Inflation has fallen but remains above target, expected to converge to 3.0% by Q3 2026. Global risks, including Trump’s tariff threats, add uncertainty. Despite economic weakness, some monetary tightening may s

Fixing The U.S. Trade Deficit

February 6, 2025 2:30 PM UTC

  New U.S. trade deals will likely make slow progress in reducing bilateral trade deficits as the underlying drivers behind the U.S. trade deficit are macro forces.  While the U.S. economy outperforms other major trading partners; the value of the USD remains overvalued and as long as tariffs are

Trump Tariffs, or Not: Trying to Make Sense of a Policy Farce

February 3, 2025 11:46 PM UTC

So, after a weekend and a day of drama we are back to where we were on Friday morning. Forecast updates made on the imposition of tariffs will not be thrown in the trash can, but now will be held as an alternative should Trump decide to go ahead on March 1 after postponing them from February 1 (whic

Trump Tariffs: Bad for The U.S., to Canada and to Mexico

February 3, 2025 6:34 PM UTC

In announcing 25% tariffs on Canada and Mexico, as well as additional 10% tariffs on China, Trump exceeded the expectations of many, including ourselves. The situation is fluid with Mexico (but not yet Canada) receiving a one-month delay, but the risks of a lasting trade war need to be seriously con

Mexico GDP Review: 0.6% Contraction in Q4 and Recession Risks

January 31, 2025 6:34 PM UTC

Mexico’s GDP shrank by 0.6% in Q4 2024, bringing annual growth to 1.5%, well below previous years. The industrial sector led the decline, driven by uncertainty over Trump’s election and weaker investment, while agriculture also contracted sharply. Monetary tightening, lower U.S. demand, and poli

Brazil Risk Premia and EM Debt

January 20, 2025 8:15 AM UTC

Brazil debt market has two domestic crises rather than a spillover from the U.S. in the form of inflation and fiscal policy. Very restrictive BCB policy can help produce some disinflation and we forecast 4.1% for 2026, which some allow some rate cuts in H2. Brazil risk premium will likely be reduced

Mexico’s Plan: An Eye on Nearshoring and Displacing China in U.S.

January 15, 2025 1:17 PM UTC

President Claudia Sheinbaum’s “Mexico Plan” targets USD 270 billion in investments, aiming to reduce poverty, boost sustainability, and expand Mexico’s economy. Key goals include nearshoring, increasing domestic production, and fostering U.S. trade relations. However, private investment stag

Mexico CPI Review: Downtrend Continues

January 10, 2025 2:11 PM UTC

December’s CPI grew 0.4%, with Y/Y inflation dropping to 4.2%, above Banxico’s 2%-4% target. Core CPI rose 0.5%, driven by services, while non-core inflation was stable. MXN depreciation’s pass-through impact remains limited. Tight monetary policy supports convergence, but Banxico faces a deci

Mexico CPI Preview: Christmas Acceleration

January 6, 2025 2:19 PM UTC

Mexico's December CPI is forecasted to grow by 0.5% in December, bringing 2024 inflation to 4.3%, above Banxico's target. Core CPI aligns better at 3.5%. Weak demand aids inflation convergence, expected by Q3 2026. Risks include a 22% MXN depreciation and U.S. tariffs. Banxico is likely to continue

Markets 2025: A Tale of Two Halves

January 6, 2025 8:10 AM UTC

·  For financial markets, 2025 will likely be a game of two halves.  US exceptionalism will likely drive US equities to extend outperformance in H1, while the USD rises further as tariffs (threats and actual) escalate.  However, 10yr U.S. Treasury yields will likely push higher in H2, which can

EM Government Debt: BRICS Divergence

January 2, 2025 8:05 AM UTC

   Brazil and South Africa suffer from debt servicing costs outstripping nominal GDP, which will remain a concern unless a consistent primary budget surplus is seen – though S Africa enjoys a much longer than average term to maturity than Brazil.  India and Indonesia, in contrast, enjoy nominal

December Outlook: The Trump Effect- Tariffs, Fiscal Shifts and Geopolitics

December 30, 2024 8:05 AM UTC

All chapters of the December Outlook are now available and simply click the link below. 

December Outlook Webinar on Jan 7: The Trump Effect- Tariffs, Fiscal Shifts and Geopolitics

December 24, 2024 8:30 AM UTC

    The U.S. economy’s momentum remains reasonable before the impact of President-elect Trump’s policies in 2025 and 2026.  While high uncertainty exists on the scale and timing of policy, the strategic bias is clear – sizeable tax cuts that will boost the budget deficit; tariffs (threats

December Outlook: The Trump Effect- Tariffs, Fiscal Shifts and Geopolitics

December 20, 2024 12:15 PM UTC

All chapters of the December Outlook are now available and simply click the link below. 

EMFX Outlook: Hit From Tariffs, Before Divergence

December 20, 2024 10:00 AM UTC

·        EM currencies on a spot basis will remain on the defensive in H1 2025, as we see the U.S. threatening and then introducing tariffs on China imports – 30% against the current average of 20%. China’s response will likely include a Yuan (CNY) depreciation to the 7.65 area on USD/CN

Outlook Overview: The Trump Effect- Tariffs, Fiscal Shifts and Geopolitics

December 19, 2024 9:25 AM UTC

·        The U.S. economy momentum remains reasonable before President elect Trump’s policies impact in 2025 and 2026.  While high uncertainty exists on the scale and timing of policies, the strategic bias is clear – sizeable tax cuts that will boost the budget deficit; tariffs (threats

LatAm Outlook: Economic Shifts

December 18, 2024 5:21 PM UTC

·       Brazil and Mexico economy are likely to decelerate in terms of growth in 2025, although we see this being stronger in Mexico. Mexico legal reforms and its close ties with U.S. increases uncertainty for 2025, especially after Trump elections, although we see tariffs in 2025 as unlikely

Jan 7 Outlook Webinar: The Trump Effect- Tariffs, Fiscal Shifts and Geopolitics

December 18, 2024 1:23 PM UTC

    The U.S. economy’s momentum remains reasonable before the impact of President-elect Trump’s policies in 2025 and 2026.  While high uncertainty exists on the scale and timing of policy, the strategic bias is clear – sizeable tax cuts that will boost the budget deficit; tariffs (threats

Mexico CPI Review: Signs of Disinflation

December 10, 2024 11:04 AM UTC

Mexico’s November CPI rose 0.4%, lowering the Y/Y rate to 4.6% from 4.8% in October. Non-core inflation increased 1.7%, driven by energy costs and seasonal electricity tariff adjustments, while core inflation remained flat, with core goods contracting 0.3%. Key declines occurred in Domestic Goods

Central and Latin America: Country Risk Ratings

December 6, 2024 11:00 AM UTC

We provide country risk reviews for select Central and Latin America countries.  

Banxico Minutes: Evaluating Further Cuts

November 29, 2024 7:31 PM UTC

Banxico’s latest minutes reveal a 25 bps rate cut to 10.25%, with most board members supporting continued easing. They view recent non-core inflation spikes as transitory, expecting headline CPI to decline as shocks dissipate. Core CPI has dropped to 3.8%, reinforcing the case for further cuts, wh

Mexico: Budget Aims at Resuming Fiscal Discipline

November 22, 2024 11:21 PM UTC

Claudia Sheinbaum’s administration has introduced the 2025 budget, reaffirming Mexico's commitment to fiscal discipline with a projected fiscal consolidation of 2.0% of GDP, reducing the fiscal deficit from 5.9% in 2024 to 3.9% in 2025. Although there is likely an overestimation on GDP growth we b

Brazil and Mexico Labour Productivity: A Headwind for Growth

November 19, 2024 12:03 PM UTC

Brazil and Mexico labour productivity has been stagnant in the last years, with both countries registering lower labour productivity levels than they were 12 years ago, with the gap with U.S. only widening. With both countries approaching full-employment, measures will need to be taken to foster gro

Mexico CPI Review: Agricultural Goods Drive Inflation Up

November 8, 2024 2:58 PM UTC

Mexico's CPI rose 0.54% month-over-month in October, with a year-over-year increase to 4.8%, slightly above expectations. Agricultural goods and energy prices were key contributors. Core CPI, showing positive recent trends, rose 0.3% month-over-month and dropped to 3.8% year-over-year. Banxico is ex

Banxico Preview: Continuing to Cut at 25bps Pace

November 5, 2024 7:45 PM UTC

Mexico's Central Bank (Banxico) is expected to proceed with a 25 basis-point rate cut on Oct. 10, bringing the policy rate to 10.0%. Banxico remains focused on core CPI, which is gradually decreasing toward its 3.0% target. While some previously anticipated a 50 basis-point cut, consensus now favors

Mexico GDP: Demand Sustains Q3 Rebound, but Growth Expected to Slow

October 30, 2024 6:01 PM UTC

Mexico's Q3 GDP grew by 1.0% quarter-over-quarter, beating market expectations, though annual growth slowed to 1.5%. High employment and stronger-than-expected U.S. demand sustained growth, but the outlook remains cautious. Slower growth is expected ahead, with limited structural shifts such as near

Mexico: Economy Contracts in August, Slowdown Continues

October 23, 2024 6:25 PM UTC

Mexico’s economy contracted by 0.3% in August, with agriculture down 9% and the industrial sector shrinking by 0.5%. Construction dropped 3.6%, and employment growth slowed. Weaker internal demand and stabilizing U.S. demand signal more challenges ahead. Banxico may cut rates further, but subpar g

Mexico: More Institutional Reforms on the Pipeline

October 20, 2024 3:09 PM UTC

Morena's political dominance has strengthened with Claudia Sheinbaum's election and judicial reforms, allowing them to shape the Supreme Court. This boosts their ability to push controversial policies, like state control of Mexico’s energy sector. However, economic slowdown and potential U.S. poli

Central and Latin America: Country Risk Ratings

October 17, 2024 10:00 AM UTC

We provide country risk reviews for select Central and Latin America countries.  

Banxico Review: 25bps Cut as Expected, But Not Unanimous

September 27, 2024 12:58 PM UTC

Banxico cut the policy rate by 25 bps to 10.5%, but the decision was not unanimous, with one dissenter favoring a higher rate. Weak domestic growth and softening core CPI suggest further cuts are likely, though caution is needed due to market volatility. Banxico’s minutes will provide more clarity

September Outlook: Rate Cuts But How Far?

September 27, 2024 7:44 AM UTC

The 15 chapters of our September Outlook have now been published.  See the headlines and weblinks enclosed for links to the articles on economic, policy and markets for the 23 countries that we cover.

EM FX Outlook: Fed Easing Helps but Divergent Trends

September 26, 2024 8:00 AM UTC

  USD strength is ebbing across the board, which provides a positive force for most EM currencies on a spot basis.  However, where inflation differentials are large, the downward pressure will remain in 2025 e.g. Turkish Lira (TRY).  Where inflation differentials are modest against the U.S., but

Outlook Overview: Rate Cuts But How Far?

September 25, 2024 7:30 AM UTC

·        The U.S. economy is slowing, with the critical question being whether this is a soft or harder landing.  Our broad analysis leaves us inclined to the soft landing view into 2025, though we shall watch real sector data closely over the next 3-6 months to check the trajectory.  Else

LatAm Outlook: Diverging Patterns

September 24, 2024 12:54 PM UTC

·       Brazil and Mexico started to diverge in terms of growth. While we see Brazil GDP growing above 3.0% in 2024 (pushed by the internal demand), we see Mexico’s growth decelerating to 1.3%, due to weaker demand from U.S. and contractionary monetary policy. In 2025, we see Brazil growing

Sep 27 Outlook Webinar: Rate Cuts But How Far?

September 15, 2024 10:30 AM UTC

    Uncertainty about whether the U.S. economy will have a soft or hard landing is growing as the market approaches Q4.  This is shaping the debate regarding the scale of easing through the remainder of 2024 and 2025 by the Fed.  European easing is underway, but how much further will central ba

Mexico: Controversial Judicial Reform is Approved by the Congress

September 13, 2024 1:39 PM UTC

The Mexican Senate approved a controversial judicial reform proposed by President López Obrador's MORENA party. The reform calls for the election of all 7,000 federal judges, with current judges being dismissed. Supreme Court justices will also be reduced and replaced by elections in 2025. Concerns

Mexico CPI Review: 0% Inflation in August as Expected

September 10, 2024 1:53 PM UTC

Mexico's CPI remained flat in August, causing year-over-year CPI to drop from 5.6% to 5.0%. This stability was driven by a 0.7% decline in non-core CPI, while core CPI rose 0.2%. The Food and Beverages CPI fell 0.6%, reflecting easing pressure on agricultural goods. With the economy cooling, inflati