Mexico's Consumer Confidence Indicator increased by 1.1 points in July to 45.0, recovering from the previous month, although it remained 0.7 points below its level a year earlier. The monthly improvement was broad-based, as all five components of the index posted gains, highlighting a better perception of the country's current and future economic conditions, as well as greater willingness to purchase durable goods.

Our Take

The rebound in confidence suggests improved sentiment at the beginning of the third quarter. However, the year-over-year decline indicates that consumers remain cautious about the economic environment, making it important to assess whether this recovery translates into stronger economic momentum in the coming months.

Banxico's monthly survey of private sector economists showed a moderate improvement in economic expectations. The median inflation forecast for the end of 2026 was revised down from 4.20% to 4.00%, while the 2027 forecast remained virtually unchanged at 3.84%. For core inflation, the 2026 forecast also declined to 4.00%, although the 2027 estimate edged up slightly to 3.86%. On economic activity, the GDP growth forecast for 2026 was revised higher from 1.10% to 1.20%, while the 2027 projection remained at 1.80%. Finally, expectations for the overnight rate at the end of 2026 and 2027 remained unchanged at 6.50%.

Our Take

Overall, the survey results point to an improvement in perceptions of the macroeconomic environment, combining lower inflation expectations with an upward revision to expected growth. However, the fact that forecasts for the overnight rate remain anchored at 6.50% for both horizons suggests that analysts do not yet believe these improvements are sufficient to materially alter the expected path of monetary policy.

The U.S. trade deficit in goods and services narrowed to $73.3 billion in June, a monthly contraction of 5.6%. The improvement was driven primarily by a 1.8% decline in imports, more than offsetting the 0.9% decrease in exports. Notably, imports of computers and semiconductors moderated after several months of strong growth linked to investment in artificial intelligence.

Our Take

The narrowing of the trade deficit in June reflects slower U.S. imports, particularly of capital and consumer goods, rather than a sustained rebound in exports, suggesting softer domestic demand rather than a structural improvement in external competitiveness.

Developments in the Middle East continue to be marked by conflicting messages. Qatar stated that a draft framework for a potential agreement between the U.S. and Iran is already circulating, focused on a short-term solution to restart negotiations, although it clarified that no direct talks between the two countries are currently planned. Meanwhile, Trump warned that his offer of dialogue represents Iran's last opportunity to reach an agreement before a "decapitation" of its capabilities, demanding the full reopening of the Strait of Hormuz.

Our Take

Despite these conflicting statements, financial markets have maintained a positive tone, interpreting the diplomatic channel between Iran and Oman as potentially leading to the reopening of the Strait and, at least temporarily, reducing the risk of a broader military escalation.

Elon Musk's SpaceX is not yet profitable and currently has a highly speculative business model, meaning today's earnings report could raise more questions than answers. The stock is trading 49% below its June 16 high, and on Thursday one of the largest share lock-up expirations in capital markets history will occur, with up to 911.5 million shares becoming eligible for sale.

Our Take

The combination of an unprofitable business, a high valuation, and a lock-up expiration of this magnitude creates a recipe for volatility that extends well beyond today's operating results. In addition, the quarterly report may help shape market sentiment toward artificial intelligence (AI).

Corporate News

Palantir reported second quarter results that significantly exceeded expectations. The company posted net income of $1.062 billion, more than triple the amount recorded in the same period last year, while earnings per share reached $0.44, surpassing both the $0.14 reported a year ago and the consensus estimate of $0.35. Revenue totaled $1.935 billion, above the expected $1.8 billion, prompting the company to raise its full-year guidance and reinforcing the perception of strong operating momentum.

Amazon became the fifth company in history to surpass a $3 trillion market capitalization, joining Apple, Nvidia, Microsoft, and Alphabet. The company founded by Jeff Bezos reached this milestone after its shares surged more than 15% last Friday following better-than-expected second quarter results, and gained more than 5% again on Monday.

Caterpillar reported adjusted earnings of $8.17 per share, well above the consensus estimate of $6.17, and revenue of $20.5 billion, also surpassing expectations of $19.0 billion. The company's Energy & Transportation segment, which manufactures diesel engines and industrial gas turbines, has become its largest and fastest-growing business, overtaking its traditional construction equipment division, driven by data center investment.

Toyota Motor raised its profit forecast and announced a ¥1 trillion ($6.3 billion) share buyback after resilient demand for hybrid vehicles and a weak yen offset higher costs, tariffs, and supply chain disruptions.

The To-do List

  • Follow SpaceX's earnings report, its shares have fallen 49% from their June high, and the largest share lock-up expiration is scheduled for Thursday.

  • Monitor the U.S.-Iran negotiations, Qatar confirmed that a draft agreement is circulating, but Trump warned that this is Iran's last opportunity.

  • Tonight, prepare poblano peppers stuffed with cheese, served with cream and tomato sauce, a seasonal classic that's perfect for enjoying during a relaxing evening.

  • Set aside 30 minutes for a swimming or pool workout, one of the most complete forms of exercise and one that places minimal stress on the joints.

Today's Quote...

"Those who say something is impossible should not interrupt those who are doing it."

— Chinese Proverb