Mexico's industrial production grows 2.1% monthly in April, its fastest pace of expansion in 5 years.
The advance was largely explained by the sharp increase in the construction sector (7.6%) and a slight rebound in manufacturing (1.2%).
Markets and Stocks
US indices were showing advances in futures trading, rebounding for a second consecutive day despite a new round of military exchanges between the US and Iran overnight and Tehran's statements that the ceasefire has become meaningless. WTI retreats 0.8% to US$89 while Brent sheds to near US$92, amid signals that peace negotiations have intensified according to Iranian sources cited by Reuters. The 10-year Treasury yield sheds three basis points to 4.53% following Wednesday's post-CPI rebound. Additionally, the ECB raised its benchmark rate by 25 basis points to 2.25% for the first time since 2023, the May US PPI rose at the fastest pace in more than three years, Oracle results were published showing greater momentum in capital expenditure, and Adobe reports today at the close. Tomorrow SpaceX debuts on Nasdaq under the symbol SPCX.
Monitor
Bolsas / Exchanges
S&P 500
7,313
0.50%
Nasdaq
28,793
0.80%
Dow Jones
50,259
0.50%
IPyC
64,910
0.10%
Monedas / FX (Foreign Exchange)
USD/MXN
17.4040
0.00%
EUR/MXN
20.058
0.00%
EUR/USD
1.1538
0.00%
Índice DXY
100.07
0.10%
Tasas / Exchange Rates
Treasury 2 años
4.14
1.4bp
Treasury 10 años
4.53
-1.0bp
TIIE 3 meses
6.5
2.0bp
M Bono 10 años
9.14
0.0bp
Commodities / Commodity Markets
Petróleo (Brent)
93.11
0.00%
Oro
4,085
0.30%
Key points
Mexico receives more international travelers in May but captures fewer foreign exchange revenues.
US producer inflation rises to three-year highs in May.
The European Central Bank follows the script and raises benchmark interest rates by 25 basis points.
The United States is said to resume attacks on Iran today.
For the rest of the day, the interbank exchange rate (pesos per dollar) could trade between $17.35 and $17.45 spot.
What you need to know about the economy and markets
Industrial activity in Mexico showed a significant recovery in April 2026, with monthly growth of 2.1%, the largest advance in recent years, and annual expansion of 1.8% on seasonally adjusted figures. Performance was driven primarily by the sharp rebound in construction (+7.6% monthly), as well as a more moderate advance in manufacturing (+1.2% monthly), while mining and the energy sector recorded marginal declines. On an annual basis, the dynamism of construction stands out (+10.2%), contrasting with the weakness in manufacturing, which showed a slight contraction.
Our Take
The reading points to an important rebound in industrial activity after the weakness observed in prior months, though with a heterogeneous composition. The strength in construction suggests relevant momentum from public or private works, while the recovery in manufacturing remains gradual and still faces challenges in its annual comparison. Taken together, while the reading is positive in the short term, the divergence between sectors suggests that the recovery of the industrial component is not yet broad-based or fully solid.
In April 2026, 8,289,421 international travelers entered Mexico, 8.1% more annually. However, non-border tourists, who stay overnight and access primarily by air, recorded a 7.5% annual decline. This decrease translated directly into a spending contraction, where non-border tourists spent 6.2% less annually. Total spending by all international travelers in Mexico showed a 2.3% annual decrease.
Our Take
April's report reveals that Mexico is receiving more travelers but capturing fewer foreign exchange revenues. The 8.1% increase in total arrivals is explained primarily by the dynamism of excursionists (day visitors, border crossers, and cruise passengers) whose average spending is marginal.
US producer prices rose in May at the fastest pace in more than three years, as the repercussions of the war with Iran continued to fuel inflationary pressures. On an annual basis they increased 6.5%, following April's 6.0% and one tenth above what was anticipated. Compared to April, the index registered an advance of 1.1%. The core index, which excludes food and energy, rose 4.9% compared to the same month the prior year.
Our Take
Adding to other data published yesterday that revealed consumer prices rose last month at the fastest pace in three years, today's data will likely support bets that the Federal Reserve will raise interest rates at some point in 2026. The central bank is entirely focused on controlling inflation now that the labor market appears to be regaining momentum.
The European Central Bank (ECB) raised interest rates for the first time in nearly three years, bringing the rate to 2.25%. The justification is that the war in the Middle East is generating significant inflationary pressures. Additionally, it worsened its inflation forecasts: for 2026 they rise from 2.6% to 3.0%; for 2027, they increase from 2.0% to 2.3%; and it would not be until 2028 that inflation returns to the 2.0% target.
Our Take
The decision to raise rates does not represent, for the moment, the start of a monetary cycle change, but rather a specific adjustment. Although financial markets are pricing in at least one more rate increase before the end of the year.
Although it appeared that the US, after attacking some of Iran's defensive positions yesterday, had concluded the operation, in the early hours of today President Trump published a message saying he would attack Tehran again during the night and threatened to take control (in the immediate future) of the country's energy infrastructure, including Kharg Island. Iran declares that Washington's latest attacks effectively render the current ceasefire void.
Our Take
Trump's comments threaten a greater escalation, which could derail the slow negotiations toward a peace agreement. Taking Kharg Island would likely require the use of US ground forces, which would pose political challenges for the president given that the war is increasingly unpopular in the country.
Corporate News
Oracle reported fiscal fourth-quarter results with cloud (OCI) revenues that reflected acceleration and a US$70 billion commitment to data center investment over the next year. However, its quarterly capital expenditures exceeded market estimates, intensifying concerns about the profitability of the AI infrastructure business and the negative free cash flow that has characterized its transition.
Our Take
Oracle precisely illustrates the central tension of the AI cycle: revenue growth is real and accelerating, but the capital required to capture it is so intensive that free cash flow generation remains in negative territory for an extended period.
Adobe reports fiscal second-quarter results at today's close, with shares having fallen approximately 30% for the year amid fears that generative AI tools will replace the need for subscriptions to Photoshop, Illustrator, and Creative Cloud. The company argues that AI raises the productivity of its existing users and creates new categories of demand rather than eroding existing ones. In the fiscal first quarter, Adobe reported record revenues. The market will evaluate today whether that trajectory was sustained in the second quarter and whether the pipeline of new generative AI products, particularly Firefly, is generating incremental revenues or simply retaining customers who would otherwise have abandoned the platform.
Our Take
Adobe is the company that best tests the most important hypothesis of the second half of the AI cycle: whether software companies are victims of disruption or beneficiaries of adoption. The market's verdict in the first quarter was constructive, but the 30% year-to-date decline suggests the market does not trust that performance to be sustainable. A strong second quarter could initiate a revaluation that the enterprise software sector urgently needs, especially with Salesforce and other platforms also under pressure.
The to-do list
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Alejandra Marcos amarcos@kapital.com
James Salazar jsalazars@kapital.com
Guillermo Quechol gquechol@kapital.com
Nahely Suasnavar nsuasnavara@kapital.com
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