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The Citi survey kept its GDP growth forecast at 1.4% for 2026 and 1.8% for 2027, and Banxico’s policy rate at 6.50% at the end of both years. For 2026, it lowered its headline inflation estimate from 3.93% to 3.90% and its core forecast from 3.92% to 3.88%. The main adjustment came in the exchange rate, with the peso now expected at 18.00 per dollar in 2026 and 18.50 in 2027, up from 17.50 and 18.00, respectively.

Our Take

The consensus continues to anticipate moderate growth and an extended Banxico pause. The slight improvement in the inflation outlook offers some relief, but the shift toward a weaker peso introduces upside risk to imported-goods prices. The backdrop supports keeping rates unchanged, while still offering little room to resume cuts.

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The World Bank raised its growth forecast for Mexico from 1.3% to 1.4% in 2026 and from 1.7% to 1.8% in 2027. Despite the upgrade, the country would still lag the region’s projected 2.2% growth this year. The institution said restrictive monetary conditions, uncertainty surrounding domestic and trade policies, and weaker public investment continue to constrain activity and private investment.

Our Take

After four consecutive years of slowing growth, the World Bank’s forecasts point to a turn in the trend, although the expected improvement remains modest and does not yet signal a strong recovery. To cement the rebound, Mexico will need to revive private investment through greater policy certainty and better financing conditions.

Today at 12 p.m., the minutes from the Fed’s latest monetary policy meeting in September will be released. At that meeting, the central bank raised its benchmark rate by 25 basis points to a range of 3.75% – 4.00%. Investors will look for signs of the committee’s willingness to deliver further rate hikes and the factors likely to shape its next decisions.

Our Take

The minutes will help gauge how firmly the committee supports additional hikes. A Fed that appears more concerned about inflation could reinforce expectations for tighter monetary policy and push bond yields higher, while greater caution over the economic slowdown would strengthen the case for a pause.

The U.S. 30-year fixed mortgage rate rose 19 basis points to 7.49% in the week ended October 2, its highest level since November 2023. It has now posted seven consecutive weekly increases. Mortgage applications for home purchases fell 2.1% to their lowest level in more than a year, while refinancing applications dropped 7.5%.

Our Take

The rise in mortgage costs shows how higher bond yields are feeding through to the broader economy. Combined with still-elevated home prices, it reduces affordability and slows transactions. It also limits refinancing activity, making it harder for households to lower monthly payments and free up income for consumption.

German industrial production rose 2.0% month over month in August, its strongest increase since March 2025, well above the 0.5% expected and offsetting July’s decline. The increase was driven by construction and capital goods, although auto production fell.

Our Take

The rebound points to a recovery supported by public spending on infrastructure and defense. A backlog of unfilled orders provides some support for the coming months despite the recent decline in new orders. Still, weakness in autos and elevated energy costs show that the recovery remains uneven.

Corporate news

Elon Musk’s SpaceX is in talks to raise $40 billion to fund the purchase of Nvidia chips. If completed, the deal would represent a major investment aimed at expanding the company’s computing capacity.

Apple is preparing a smart doorbell and thermostat in partnership with LG Electronics, as part of its push into connected-home devices. The products would expand the reach of Apple’s ecosystem into more everyday household functions.

Shares of Constellation Brands, the U.S. brewer that produces and distributes Mexican beer brands Modelo and Corona under license, fell as much as 4.9% after some investors were disappointed that the company did not raise its earnings guidance.

Porsche plans to raise prices on its higher-end sports models by an average of 20% and introduce a new model positioned above its long-standing flagship, the 911, in an effort to revive weakening profits.

The “to-do list”

  • Closely track Tropical Storm Isaias, which is expected to strengthen into a hurricane tomorrow, Thursday, near the Yucatán Peninsula.

  • Watch today’s $39 billion auction of 10-year Treasury notes after the yield on that maturity moved back above the 5.30% threshold.

  • Set aside 25 minutes today for upper-body and core training. Warm up for five minutes, then complete three rounds of 10 push-ups, 12 one-arm rows per side, 12 biceps curls, 10 dead bugs per side and a 20-second plank. Rest 45 seconds between exercises.

  • Remember that today, October 7, is Mexican Wine Day.

Quote of the day…

“I can calculate the motion of heavenly bodies, but not the madness of people.”...Isaac Newton