The US Consumer Price Index (CPI) rose in March to 3.3% annually, up from 2.4% in February, its highest level since 2024. On a monthly basis, the increase was 0.9%, the largest monthly jump since 2022. The unprecedented rise in gasoline prices explains nearly three-quarters of the monthly increase. Core inflation, which excludes food and energy, ticked up one tenth in the third month of the year to 2.6%, below the 2.7% the market had expected.

Our take

The data make clear how the war in the Middle East is rapidly affecting the US economy, compounding the affordability challenges many households have experienced in recent months. The good news is that the core figure appears to demonstrate that inflationary pressures are not spreading to other sectors of the economy.

US and Iranian delegations are scheduled to meet in Pakistan this weekend, with Ormuz transit as one of the main sticking points. President Trump demanded that Iran reopen the Strait while Israel and Hezbollah continue exchanging attacks, complicating the upcoming talks aimed at transforming a fragile truce into a lasting peace.

Our take

Investors are closely watching the fragile ceasefire and the planned dialogues between the US and Iran. The situation remains unstable, as the truce appears fragile and there are numerous doubts about its terms and compliance.

Producer prices in China recorded an increase of 0.5% annually in March 2026, marking their first positive reading in more than three years and breaking a 41-month streak of declines. The figure slightly exceeded market expectations (0.4%). Meanwhile, consumer inflation stood at 1.0% annually, decelerating from 1.3% in February and below consensus (1.2%).

Our take

The rebound in producer prices suggests the beginning of cost-side inflationary pressures, driven in part by external factors such as rising input costs from the war in Iran. If the oil shock normalizes, wholesale prices could return to declines. Meanwhile, the weakness in consumer inflation, particularly the monthly decline, reflects still-fragile domestic demand.

The Banxico minutes corresponding to the March 26 monetary policy meeting were published yesterday. They reflect a marked internal debate, with the majority supporting the rate cut in view of economic weakness, while the minority expressed concern about inflationary risks, particularly given the geopolitical environment. This comes amid a renewed inflationary backdrop, as yesterday's data also showed Mexico's inflation accelerating to 4.59% annually in March 2026, up from 4.02% in February, reaching its highest level since October 2024.

Our take

The minutes reveal a clear division within the Bank of Mexico, with part of the Governing Board appearing to prioritize low economic momentum and another part more concerned about current inflation levels. The majority's central argument rests on economic slack to absorb shocks, while the dissenters warn of upside risks stemming from energy prices and external volatility.

Markets and Stocks

The week closing today has been the best for global markets since the start of the conflict. The S&P 500 has accumulated eight consecutive sessions of gains, emerging markets are recording their best week in more than three years, high-yield credit spreads have returned to pre-war levels, and implied volatility in equities, bonds, and currencies has returned to February 28 levels. However, the reality in the Strait of Hormuz tells a different story, with 187 tankers still trapped inside the Persian Gulf, daily traffic a marginal fraction of the historical average, Iran demanding prior authorization for any transit, and the confirmed presence of mines.

Corporate News

TSMC reported first-quarter revenues of around US$35.6 billion, a 35% year-on-year increase that surpassed consensus estimates. March sales rose 45%, driven by demand for advanced chips for artificial intelligence applications. TSMC will report its full results on April 16. The shares have accumulated a gain of around 30% for the year, outperforming the performance of its main clients.

Treasury Secretary Scott Bessent and Fed Chair Jerome Powell urgently convened the chief executives of the major US banks to a meeting at Treasury headquarters in Washington to alert them to the cybersecurity risks posed by Anthropic's new Mythos model. The model, which Anthropic has described as capable of identifying and exploiting vulnerabilities in virtually all operating systems and browsers, has been released on a limited basis only to a group of companies, including Amazon, Apple, and JPMorgan, that are part of "Project Glasswing," an initiative to strengthen the security of critical systems before similar models become more widely available.

Berkshire Hathaway placed yen-denominated bonds equivalent to US$1.7 billion, the first issuance of this kind since Warren Buffett stepped down as the company's chief executive. The transaction is consistent with Berkshire's strategy of financing its investments in Japanese companies in yen, taking advantage of the low borrowing costs in that currency. Buffett revealed this week that the company continues to accumulate US Treasury Bills, with a cash position near or above US$350 billion.

The to-do list

Quote of the day

Tonight in Mexico City, Rosetta in Colonia Roma is a safe bet: contemporary Mexican cuisine, a relaxed atmosphere, and a wine list that invites you to linger. If you prefer something more casual, the tacos at El Califa de León in Colonia San Rafael are unbeatable for closing out a long week with your feet firmly on the ground.