Three elements explain the latest surge in oil prices above 100 dollars per barrel: the decision by Iraq, the United Arab Emirates, and Kuwait to cut production after running out of storage space as exports were blocked by Iran’s closure of the Strait of Hormuz; the appointment of Mojtaba Khamenei to succeed his father as supreme leader of the Islamic Republic; and President Donald Trump’s statement that higher oil prices were “a very small price to pay” for security and peace.

Our take

Oil moving above the psychological 100-dollar threshold increases pressure on equities and spills over into sovereign debt, as the risk of higher global inflation and weaker economic growth rises. The rally in crude did not intensify further due to the G7 news that it would issue a joint statement regarding the use of strategic petroleum reserves.

In China, according to data published by the National Bureau of Statistics, the consumer price index rose 1.3% year-over-year in February, compared with 0.2% in January and above market consensus expectations. It was the highest level since January 2023. Meanwhile, the producer price index fell 0.9% year-over-year in February, moderating from -1.4% in January and marking the highest level in 19 months. In addition, this indicator has now posted five consecutive months of monthly gains.

Our take

The rebound in inflation comes at a time when Chinese authorities have made clear their goal of moving the economy away from deflationary pressures. Higher food prices were one of the key drivers. With the current March energy shock, producer prices could move into positive territory as soon as the next report.

In February 2026, 118,305 light vehicles were sold in Mexico, essentially unchanged from the same month a year earlier (-0.3%). In the same month, 311,457 units were produced and 247,495 vehicles were exported, representing annual declines of 1.8% and 4.4%, respectively. However, in the January–February cumulative period, sales reached 250,084 units (+4.4% year-over-year), exports totaled 485,426 units (+1.36%), and production showed a slight decline of 0.58% compared with the same period of 2025, at 625,774 vehicles.

Our take

February data suggest that the momentum with which the year started may not have been sustained. Auto sales in Mexico often serve as a barometer of consumer sentiment, so their stagnation suggests more cautious households. In addition, the decline in exports suggests that last year’s weakness persists, and unless a satisfactory solution is found to the new requirements in the United States, solid export numbers and therefore stronger auto production are unlikely.

German industrial production again showed weakness at the start of 2026. It fell 0.5% month-over-month in January, after a 1% decline in December, which confirms that the manufacturing sector continues to struggle to regain momentum. The consensus had expected a 0.9% increase. January’s decline was mainly driven by lower output in the metal and pharmaceutical industries, which dragged down the broader sector.

Our take

Despite this weak start, we believe there are factors that could support German industry over the course of the year, such as improved production expectations, higher order books since last summer, and the gradual reduction of inventories. However, the new geopolitical context introduces an additional risk. The war in the Middle East, and especially higher oil prices, could derail any attempt at industrial recovery in Germany.

In recent days of military conflict, the dollar appears to be reclaiming its role as a safe-haven asset, something that had not seemed present since Liberation Day and President Trump’s announcements. This generalized dollar appreciation is weighing negatively on the Mexican peso, which at times weakened to 18.0 spot. Nervous investors are seeking dollar liquidity, while also avoiding currencies of net energy importers such as Japan and much of Europe.

Our take

It is worth remembering that the main factor behind the Mexican currency’s gains during 2025 and the start of 2026 had been the weakening of the dollar. If the conflict extends, pressure on the peso could continue intensifying, so in the short term exchange rates around 18.50 spot cannot be ruled out. Once a resolution to the military conflict emerges, or signs move in that direction, the peso is very likely to return to levels around 17.30 spot.

Reuters reported that a group of 24 U.S. states has sued the U.S. administration in the first legal challenge against its newly imposed 10% global tariffs. The states argue that President Trump cannot circumvent the Supreme Court ruling that invalidated most of his previous tariffs on imported goods by citing new legal authority.

Our take

The tariff issue is becoming politicized within the United States. Democrats are taking advantage of the court ruling and the upcoming midterm elections to pressure one of President Trump’s signature policies.

Markets and Stocks

Markets in Europe traded with a negative bias. In Asia, risk aversion was even more pronounced, with the region concentrating the day’s sharpest declines. The Nikkei in Japan fell 5.2%, while South Korea’s Kospi lost 6.0%.

In commodities, Brent crude rose above 100 dollars per barrel, trading near 120 before paring gains, driven by production cuts in some Middle Eastern countries and concerns over supply disruptions. This rebound marks its largest daily gain in dollar terms since 1988. The possibility of a coordinated release of crude reserves by the G7 slightly eased the pressure.

Grupo Aeroportuario del Pacífico reported its preliminary February 2026 traffic figures, showing an annual decline of 3.2% in total passengers across its 12 airports in Mexico. Among the group’s main airports, Tijuana posted the sharpest drop at 7.4%, followed by Puerto Vallarta down 5.3%, and Guadalajara down 1.6%.

Our take

Three of the four most relevant airports posted declines, pointing to a weak start to the year for revenue generation. The setbacks in Puerto Vallarta and Guadalajara are explained by violent events surrounding the capture of the CJNG cartel leader. It is possible to estimate that traffic at Puerto Vallarta airport will remain affected by alerts from the U.S. government.

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Recommendation of the day

“Discipline is doing what needs to be done, even when you don't feel like doing it.”