Mexico

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April 17, 2025

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Banxico Minutes: Comfortable about the Cuts Amid the Volatility
Paying Article

April 17, 2025 2:26 PM UTC

Banxico’s latest minutes confirm a cautious but steady path toward policy normalization, with the policy rate expected to reach neutral levels (7.00–8.00%) in 2025. While the economy shows signs of deceleration and a negative output gap, inflation continues to ease, nearing historical averages.

April 15, 2025

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Nervous U.S. Long Term Asset Holders
Paying Article

April 15, 2025 8:30 AM UTC

   Overall, foreign equity investors can no longer count on U.S. exceptionalism and could face lower long-term corporate earnings growth, which at a minimum will likely slow net inflows.  Bond investors also face ongoing policy volatility, which likely means a need for an extra risk premium – t

April 14, 2025

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U.S./China High Stakes Poker
Paying Article

April 14, 2025 7:30 AM UTC

The economic hit from a hard stop in U.S. imports/exports is too damaging for both sides and our baseline is still for a truce and de-escalation, in the coming weeks. This could be negotiations on a new trade deal with a more moderate reciprocal tariff on both sides and the extra reciprocal tariffs

April 10, 2025

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Mexico CPI Review: Moving as Expected
Paying Article

April 10, 2025 2:20 PM UTC

Mexico’s March CPI rose 0.31%, matching expectations but below the historical average. Annual inflation edged up to 3.80%, driven by core components like food and services. Non-core inflation fell due to lower energy prices. Food saw strong gains, while transport costs declined. The narrowing gap

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Trade Deals with the U.S.: Pressures and Obstacles
Paying Article

April 10, 2025 7:17 AM UTC

Pressures to do trade deals include the weaker U.S. economy and higher inflation when it arrives/foreigners becoming nervous of their USD30trn plus holdings of U.S. securities and more crucially risks to Trump and GOP approval ratings from Republican voters. Obstacles to quick trade deals include Tr

April 09, 2025

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U.S China Trade War: Deal or No Deal Prospects?
Paying Article

April 9, 2025 9:00 AM UTC

The prospect of a trade deal between the U.S. and China are less and likely delayed into 2026, due to the hardline stance of Trump 2.0 due to the extra focus on tariff tax revenue and shifting production back to the U.S. It is still our baseline that a deal will be agreed though we would now see a d

April 08, 2025

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Reciprocal Tariffs: The Hit To Other Countries
Paying Article

April 8, 2025 9:30 AM UTC

 Overall, we are still assessing the effects on non U.S. countries from the tariffs being imposed by the U.S. via direct trade/business investment/currency and financial & monetary conditions swings.  The impact will be adverse to GDP, but for some major countries could be less than the U.S.  How

April 03, 2025

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Mexico: Saved from Tariffs?
Paying Article

April 3, 2025 7:56 PM UTC

Mexico has avoided reciprocal tariffs but still faces steel, aluminum, and auto tariffs. Authorities are negotiating to exempt goods, though retaliatory tariffs on U.S. imports seem unlikely. Mexico's economy is slowing, with growing recession fears and diminishing nearshoring prospects. The industr

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Tariffs: Inflation may be the biggest worry for the U.S.
Paying Article

April 3, 2025 4:12 PM UTC

While surprising the market in their intensity, Trump’s “reciprocal” tariffs were in line with previous threats on most countries, and with Canada and Mexico being treated less harshly that feared, the net surprise is modest to us. However we do feel that inflationary risks have increased furt

March 31, 2025

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U.S. Trade Surplus Countries: No Special Treatment?
Paying Article

March 31, 2025 9:04 AM UTC

Quick dilutions of tariffs or exemption will likely be slow in coming for countries that the U.S. has trade surpluses with, as the Trump administration are currently more focused on tariffs for tax revenue and trying to switch production back to the U.S. than trade deals.  Trade policy uncertainty

March 29, 2025

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Banxico Review: Lowering Rates Amid Tariffs
Freemium Article

March 29, 2025 9:29 PM UTC

Mexico’s Central Bank (Banxico) has cut the policy rate by 50 bps to 9%, in line with market expectations. The tone of the communiqué suggests a more dovish stance, with the board moving towards a neutral rate. Inflation has reached its lowest level since 2021, while economic growth has slowed. B

March 27, 2025

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March Outlook: Navigating the Turbulence
Paying Article

March 27, 2025 10:30 AM UTC

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

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Car Tariffs Then Lenient Reciprocal Tariffs?
Freemium Article

March 27, 2025 8:59 AM UTC

   The 25% tariffs on cars underlines that tariffs are not just about getting better trade deals, but in Trump’s view raising (tax) revenue and trying to shift production back to the U.S. Combined with other tariffs being implemented, plus policy uncertainty, we see a moderate overall hit from t

March 26, 2025

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LatAm Outlook: Navigating the Uncertainty
Paying Article

March 26, 2025 9:56 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 institutional reforms and its close ties with U.S. increases uncertainty for 2025, especially after Trump victory, and the menaces of Trump imposing tar

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Outlook Overview: Navigating the Turbulence
Paying Article

March 26, 2025 9:30 AM UTC

·       More tariffs will arrive from the U.S. from April with product (car, pharma, semiconductors and lumber) and reciprocal tariffs. President Trump has a 3-part approach to tariffs to raise (tax) revenue; bring production back to the U.S. and get fairer trade deals.  This means some of t

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EMFX Outlook: Divergence versus the USD
Paying Article

March 26, 2025 9:16 AM UTC

EM currencies will be helped by the ongoing USD downtrend against DM currencies, but prospects also depend on relative inflation differentials versus the USD and starting point in terms of valuations.  The Brazilian Real (BRL), Mexican Peso (MXN) and Indonesian Rupiah (IDR) should all make modest s

March 21, 2025

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Trump Product and Reciprocal Tariffs
Paying Article

March 21, 2025 9:00 AM UTC

It appears that we will get bad news from April 2 on extra tariffs before any good news.  Firstly, the announcement effect of tariffs for many countries and extra products will hurt U.S. business and consumer sentiment.  Secondly, part of the reason for tariffs is extra tax revenue and to try to s

March 10, 2025

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Trump and Dollar Policies
Paying Article

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

March 05, 2025

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Mexico: Uncertainty Mounts as Tariffs Are Imposed
Paying Article

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

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Trump Latest Thinking
Paying Article

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

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Central and Latin America: Country Risk Ratings
Paying Article

March 5, 2025 11:00 AM UTC

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

March 04, 2025

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

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

March 03, 2025

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Trump Tariffs and U.S. Business and Consumer Sentiment
Paying Article

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

February 28, 2025

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Mexico: Labour Market Decelerating as Expected
Paying Article

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

February 21, 2025

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Banxico Minutes: More Cuts on the Way
Paying Article

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

February 19, 2025

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Mexico: Tariffs and Growth Issues Could Impose Fiscal Difficulties
Paying Article

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

February 17, 2025

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Reciprocal Tariffs and Reducing Bilateral Trade Imbalances
Paying Article

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.

February 11, 2025

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Trump’s Tariffs: Steel Then Reciprocal and Then Cars
Paying Article

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

February 10, 2025

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Mexico CPI Review: Inflation Falls as Demand Eases
Paying Article

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

February 08, 2025

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Banxico Review: 50 bps Cut as Expected
Freemium Article

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

February 06, 2025

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Fixing The U.S. Trade Deficit
Paying Article

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

February 03, 2025

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

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

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

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

January 31, 2025

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

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

January 20, 2025

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Brazil Risk Premia and EM Debt
Paying Article

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

January 15, 2025

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

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

January 10, 2025

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Mexico CPI Review: Downtrend Continues
Paying Article

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

January 06, 2025

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Mexico CPI Preview: Christmas Acceleration
Freemium Article

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

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Markets 2025: A Tale of Two Halves
Paying Article

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

January 02, 2025

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EM Government Debt: BRICS Divergence
Paying Article

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 30, 2024

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

December 30, 2024 8:05 AM UTC

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

December 24, 2024

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

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 20, 2024

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

December 20, 2024 12:15 PM UTC

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

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EMFX Outlook: Hit From Tariffs, Before Divergence
Paying Article

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

December 19, 2024

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

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

December 18, 2024

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LatAm Outlook: Economic Shifts
Paying Article

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

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

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

December 10, 2024

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Mexico CPI Review: Signs of Disinflation
Paying Article

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

December 06, 2024

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Central and Latin America: Country Risk Ratings
Paying Article

December 6, 2024 11:00 AM UTC

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

November 29, 2024

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Banxico Minutes: Evaluating Further Cuts
Paying Article

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