Mexico’s consumer confidence fell to 45.1 points in September, with all five components declining. Weaker sentiment poses downside risks to consumption in the coming months.
Key points
U.S. trade deficit widens in August
Eurozone retail sales edge higher in August
German factory orders plunge in August, missing expectations
Le Pen gives France’s bond market some relief
USMCA renewal will have to wait
For the rest of the day, the interbank exchange rate could trade between MXN 17.90 and MXN 18.05 per dollar in the spot market
Falling oil prices are setting the tone across global financial markets, with Brent down 3.1% at $97.26 per barrel. Easing inflation pressures are supporting bonds and pushing the 10-year Treasury yield four basis points lower to 5.27%, after reaching its highest level since 2002 yesterday. S&P 500 futures are up 0.4%, on track for their longest winning streak in two months, while Nasdaq 100 futures are gaining 0.5% after closing at a record high. Renewed enthusiasm around AI is also providing support, putting Nvidia within reach of becoming the first company valued at $6 trillion.
Monitor
Bolsas / Exchanges
S&P 500
7,860
0.40%
Nasdaq
31,488
0.50%
Dow Jones
51,819
0.50%
IPyC
65,241
0.40%
Monedas / FX (Foreign Exchange
USD/MXN
17.9347
-0.80%
EUR/MXN
20.1959
-0.50%
EUR/USD
1.1261
0.40%
Índice DXY
101.85
-0.30%
Tasas / Exchange Rates
Treasury 2 años
4.79
-4.8 bp
Treasury 10 años
5.27
-4.2 bp
TIIE 3 meses
6.6
10.0 bp
M Bono 10 años
9.52
-1.8 bp
Commodities / Commodity Markets
Petróleo (Brent)
97.26
-3.10%
Oro
4,169
0.70%
What you need to know about the economy and markets
Consumer confidence in Mexico fell 1.2 points in September to 45.1, leaving it 1.0 point below its level a year earlier, according to INEGI and Banxico. All five components declined, led by households’ assessment of their current financial situation, which fell 1.9 points. Economic expectations and consumers’ ability to purchase durable goods also weakened.
Our View
The broad-based deterioration points to greater household caution and could weigh on consumption in the coming months. Weaker confidence in the labor market and lower intentions to purchase cars and homes reinforce that signal, although consumer sentiment does not always translate immediately into lower spending.
The U.S. trade deficit widened 13.7% month over month in August to $105.6 billion, its highest level since early 2025 and above the $102.1 billion expected. Imports rose 4.3%, driven by oil and capital goods, while exports increased 1.4%.
Our View
The wider deficit points to a negative contribution from net trade to third-quarter GDP. However, it also reflects purchases of equipment for AI investment and higher oil prices. Because the figures are reported in nominal terms, part of the deterioration reflects higher prices rather than necessarily stronger import volumes.
Eurozone retail sales rose 0.1% month over month in August, after falling 0.6% in July, and increased 0.8% year over year. The gain came in below the 0.3% expected. Non-food sales rose 0.5% and food sales increased 0.1%, while fuel sales declined 1.9%.
Our View
The rebound recovers only a small part of July’s decline and points to limited momentum in goods consumption. Weak fuel sales are consistent with pressure from energy costs on households. For the European Central Bank, fragile demand complicates the task of responding to inflation without deepening the slowdown.
German factory orders fell 10.6% month over month in August, following a 3.2% increase in July and compared with the 1% decline expected by the market. The drop was almost entirely concentrated in aircraft, ships, trains and military vehicles. Annual growth slowed to 2.7% from 14% in July.
Our View
The decline mainly reflects volatility in large-ticket contracts, meaning it overstates the immediate deterioration in industrial activity. Still, orders excluding those transactions have fallen 2.6% on a quarterly basis, pointing to still-fragile demand that is constraining the recovery in investment and production.
The spread between 10-year French and German government bonds narrowed from a recent high near 160 basis points to below 130, after Marine Le Pen proposed bringing France’s deficit below 3% of GDP by 2032. Investors welcomed the far-right presidential candidate’s signal of fiscal discipline.
Our View
The move shows how heavily fiscal uncertainty weighs on France’s borrowing costs. The proposal provides some relief to concerns, but sustaining that improvement will depend on concrete measures and political support. A 2032 target still leaves a lengthy period of pressure on public finances.
The U.S. Trade Representative opened public consultations on the operation of the USMCA ahead of its 2027 joint review, suggesting that an extension of the agreement for another 16 years will not be finalized this year. The agency will accept comments through January 12, 2027, and will hold a public hearing to gather proposals and concerns regarding the trade agreement.
Our View
The consultations could reveal the priority issues for the second USMCA joint review and the positions of the three countries regarding an extension of the agreement. The process will help identify U.S. negotiating priorities and give companies an opportunity to defend the benefits of the agreement. For Mexico, uncertainty over potential changes could continue to hold back investment decisions.
Corporate news
Nvidia is nearing a $6 trillion valuation, which would make it the first company to reach that milestone, fueled by enthusiasm around AI. Its shares hit another record after the company issued strong revenue guidance and announced the largest share buyback in its history, while valuation multiples remain near multi-year lows.
OpenAI is in talks with United Arab Emirates funds over a $30 billion financing round, as the company faces heavy capital requirements to develop its models and expand its AI infrastructure.
Alphabet is nearing an agreement to purchase at least $1 billion of nuclear power from Constellation Energy. The deal reflects intensifying competition among technology companies to secure electricity for their data centers.
To-do list
Review remarks from Fed officials John Williams, Michelle Bowman, Jeffrey Schmid and Lorie Logan.
Follow Marvell Technology and Zscaler investor days for key signals on demand for AI infrastructure and cybersecurity.
Complete 3 rounds of 40 seconds of marching in place, 12 wall push-ups, 15 calf raises and 20 seconds of balance on each leg, with a chair nearby for support. Rest 30 seconds between rounds.
Watch whether today’s relief in French and Italian bonds holds, or whether it proves to be a tactical pause in a fiscal problem that remains fundamentally unresolved.
Remember that today marks another anniversary of the birth of Francisco Gabilondo Soler, the Veracruz-born composer known as “Cri-Cri.”
Quote of the day…
“Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria”… Sir John Templeton
Alejandra Marcos amarcos@kapital.com
James Salazar jsalazars@kapital.com
Rodrigo Ventre Ruiz rventre@kapital.com
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