Private consumption stalled in July, posting no monthly change, while rising just 1.1% year over year. Spending on imported goods increased 1.4% month over month, while consumption of domestic products fell 0.1%. Between January and July, the indicator accumulated growth of 2.0%, supported by an 8.1% increase in imports, compared with just 0.3% growth in consumption of domestic goods and services.

Our Take

The report confirms that domestic consumption has lost momentum and is providing limited support to economic growth. The weakness is concentrated in domestically produced goods, particularly durables, suggesting greater household caution amid elevated interest rates and an uncertain economic backdrop. In addition, the reliance on imported consumption reduces the multiplier effect on domestic production.

The IMF raised its 2026 growth forecast for Mexico to 1.5% from 1.2%, compared with its July estimate. For 2027, it expects growth of 1.8%, supported by exports, although it warned that external uncertainty and recent domestic regulatory and institutional changes will continue to constrain the recovery.

Our Take

The revision acknowledges an economy that is more resilient than expected, but still points to modest growth. The challenge will be for export momentum to translate into stronger investment and domestic demand. Reducing trade uncertainty and preserving fiscal stability will be key to sustaining the recovery.

The Yemeni government announced an offensive to retake territories controlled by the Houthis, including the strategic Bab el-Mandeb Strait. At the same time, Saudi Arabia, Russia and six other OPEC+ members agreed to keep their production quotas unchanged in November, extending the pause in output increases for a second month amid supply constraints caused by the conflict in the Middle East. The group will meet again on November 1 to assess its policy for December.

Our Take

Both announcements are keeping the oil risk premium elevated. An escalation in Yemen could disrupt maritime traffic through Bab el-Mandeb and raise logistics costs, while OPEC+ caution limits the group’s ability to quickly offset new supply disruptions. The balance of risks remains tilted toward high and volatile prices, with additional implications for inflation and interest rates.

Flávio Bolsonaro won the first round of Brazil’s presidential election with 47.0% of valid votes, compared with 45.2% for Luiz Inácio Lula da Silva. Neither candidate secured the required majority, meaning both will face off in a runoff on October 25. The result was stronger than expected for Bolsonaro and underscored the country’s deep political polarization.

Our Take

Bolsonaro’s stronger showing was welcomed by markets amid expectations of tighter fiscal policy and a more investment-friendly economic agenda. In the short term, the result could support the real, push local rates lower and lift Brazilian equities. However, the narrow margin keeps the race wide open and points to continued volatility ahead of the runoff.

The euro extended its decline on Monday, falling to its lowest level since May 2025, pressured by rising fiscal and political risks in Europe. The single currency dropped below $1.12 against the dollar, against a backdrop dominated by intense stress in the French bond market.

Our Take

The euro’s weakness comes after the spread between French and German 10-year government bonds widened sharply last week to levels not seen since the European debt crisis. Deteriorating confidence in France, amid doubts over the country’s ability to put its public finances back on track, has raised the risk premium demanded by investors and is transmitting pressure from sovereign debt markets into the currency.

Corporate news

Schneider Electric agreed to acquire industrial software company PTC for about $22.6 billion, stepping up its push to capitalize on the artificial intelligence boom. Analysts’ initial reaction was cautious, with concerns focused on the size and financing of the transaction, uncertainty surrounding AI disruption and whether the deal will ultimately strengthen Schneider’s competitive position.

TSMC rose 3% in Taipei trading after Elon Musk confirmed that the Taiwanese company is in talks with Terafab, his chip manufacturing initiative, over a potential collaboration. The announcement opens the door to bringing a key semiconductor manufacturer into the project. Intel, which joined Terafab in April, fell 3%.

CH Robinson Worldwide agreed to acquire truck brokerage firm RXO in a deal valued at about $5.8 billion. The acquisition will expand its logistics network and strengthen its ability to connect companies with carriers.

The to-do list

  • Review the U.S. ISM services report today at 8:00 a.m.

  • Learn that the 2026 Nobel Prize in Physiology or Medicine was awarded to Karl Deisseroth, Peter Hegemann and Georg Nagel for their discoveries in optogenetics, a technique that uses light to control neuronal activity and study how the brain produces memories, emotions and behavior

  • Complete 3 rounds of 30 seconds of fast marching in place, 12 wall push-ups, 15 calf raises and 10 standing cross-body crunches per side, bringing the knee toward the opposite elbow. Rest 30 seconds between rounds.

  • Remember that today, October 5, Mexico celebrates National Pueblos Mágicos Day

Quote of the day…

“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” … Mario Draghi