The European monetary authority raises its benchmark interest rates by 25 basis points and keeps the door open to further increases.
Key points
U.S. producer prices in line with expectations in August
Bessent loses the first round against the market
Iran and the U.S. prepare for a prolonged war that could extend through 2029, according to White House advisers
U.S. initial jobless claims fall to 206,000
For the rest of the day, the interbank exchange rate (pesos per dollar) could trade between $16.93 and $17.08 spot
Wall Street futures are trading lower, with the S&P 500 down 0.6% and the Nasdaq 100 falling 1.30%, as the rebound in oil prices and the 0.4% monthly increase in U.S. producer prices reinforced expectations of higher interest rates from the Fed. Traders are also digesting the European Central Bank’s latest decision, which came in line with expectations as it raised its benchmark rates by a quarter percentage point. Brent crude is trading above $105 per barrel amid declining Saudi production and export restrictions caused by the prolonged conflict between the United States and Iran. The yield on the 10-year U.S. Treasury is up eight basis points to 4.92%.
Monitor
Bolsas / Exchanges
S&P 500
7,599
-0.60%
Nasdaq
29,078
-1.30%
Dow Jones
52,258
-0.30%
IPyC
64,931
0.20%
Monedas / FX (Foreign Exchange
USD/MXN
16.9930
0.60%
EUR/MXN
19.7125
0.40%
EUR/USD
1.1603
-0.30%
Índice DXY
99.09
0.30%
Tasas / Exchange Rates
Treasury 2 años
4.51
8.5 bp
Treasury 10 años
4.92
8.1 bp
TIIE 3 meses
6.58
2.0 bp
M Bono 10 años
9.34
-2.0 bp
Commodities / Commodity Markets
Petróleo (Brent)
105.32
4.10%
Oro
4,343
-1.30%
What you need to know about the economy and markets
The European Central Bank (ECB) raised its benchmark interest rates by 25 basis points, in line with market expectations, marking its second increase since the start of the war with Iran. In particular, the deposit rate now stands at 2.5%. The decision came in response to the energy shock and to inflation that is expected to remain above target for an extended period. The ECB forecasts inflation at 3.0% in 2026, 2.5% in 2027, and 2.1% in 2028, while raising its growth estimate for this year to 0.9%.
Our Take
The ECB is moving ahead of other central banks in responding to higher energy prices. Although easing core and services inflation offers some relief, the balance remains tilted toward higher inflation risks and weaker growth. The resilience of economic activity leaves the door open to further increases, but elevated uncertainty explains why the bank continues to take a meeting-by-meeting approach.
U.S. producer prices rose 0.4% month-over-month in August, in line with expectations, and accelerated to 5.4% year-over-year, from 4.7% previously. The increase was concentrated in goods, which rose 1.1% amid a 4.2% jump in energy prices, while services increased just 0.1%. The index excluding food, energy, and trade services rose 0.3% month-over-month and 4.7% year-over-year.
Our Take
The results show that the energy shock continues to put pressure on production costs, although still without a broad spillover into services. As a result, tomorrow’s consumer inflation report will be key to determining whether these pressures are beginning to pass through to households.
The U.S. Treasury Secretary’s challenge to the markets got off on the wrong foot. The announcement of new bond buybacks, designed to contain the rise in yields, produced the opposite effect. The 10-year Treasury yield climbed to 4.88%, its highest level in three years, extending the selloff that began two weeks ago.
Our Take
The market reaction highlights the limits of Bessent’s strategy. Verbal interventions only work as long as traders believe they will be backed by decisive action. However, his room for influence is limited against the two main forces pushing long-term interest rates higher: the U.S. fiscal deficit and the war in Iran.
Iran appears determined to continue its military conflict with the U.S. despite the mounting economic cost. At the same time, senior White House advisers, including Vice President JD Vance and Secretary of State Marco Rubio, warned Trump that the war could continue through the remainder of his term, until January 2029, according to The Wall Street Journal. Meanwhile, the Houthis captured a strategic port city on the Red Sea, strengthening their ability to threaten maritime traffic in the region.
Our Take
The contrast between Trump’s public promise to end the war immediately after the elections and the private warning that it could continue until 2029 is perhaps the most revealing signal. The discrepancy suggests that even within the U.S. administration there are doubts about its ability to impose a swift resolution.
Initial jobless claims in the United States stood at 206,000 in the week ending September 5, a decrease of 1,000 from the previous week’s revised figure, while the four-week moving average fell to 206,000.
Our Take
Initial claims confirm that the U.S. labor market remains stable, with no signs of further deterioration. This resilience reduces the urgency to cut interest rates for employment-related reasons and leaves inflation as the main factor shaping the Fed’s September decision.
Corporate news
Oracle, the AI bellwether, reports its quarterly results after the market closes. The company has become a reflection of concerns surrounding the financing of artificial intelligence infrastructure. Its report faces elevated expectations after its shares lost half of their value over the past year.
Shares of American Eagle Outfitters fell 11% after the apparel retailer’s sales came in below analysts’ estimates, weighed down by price markdowns at its flagship brand.
Grab Holdings, Southeast Asia’s largest ride-hailing and food delivery company, is in talks to acquire a majority stake in Atome Financial, a Singapore-based buy now, pay later platform.
Elon Musk’s Boring Co. secured $3 billion in new financing backed by the United Arab Emirates, valuing the tunnel-boring startup at $23 billion.
The “to do list”
Watch for Trump’s promise to pay $5,000 to every U.S. adult if the Republican Party retains control of Congress
Monitor bond market performance after the U.S. announced that it would triple bond buybacks, a move that failed to convince the market.
Assess Oracle’s report after today’s close, the most important test of the week for the market’s tolerance of AI infrastructure financing.
Remember that today marks another anniversary of the birth of Nicolás Bravo in 1786, the insurgent known as the "Hero of Forgiveness" who served as president of Mexico on three separate occasions.
Quote of the day…
"Somewhere, something incredible is waiting to be discovered." — Carl Sagan
Alejandra Marcos amarcos@kapital.com
James Salazar jsalazars@kapital.com
Guillermo Quechol gquechol@kapital.com
Nahely Suasnavar nsuasnavara@kapital.com
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