U.S. Inflation Follows Expectations and Moderates in July
U.S. headline and core inflation both moderated by one tenth of a percentage point year-over-year in July, to 3.4% and 2.5%, respectively.
Key points
Germany's inflation rises to 2.8% year-over-year in July
The U.S. and Iran-aligned Houthis reported separate attacks on vessels
IEA warns of a larger oil supply deficit amid the war in Iran
For the remainder of the day, the interbank exchange rate (pesos per dollar) could trade between $16.97 - $17.09 spot
The moderation in U.S. inflation figures for July provides relief for traders concerned about ongoing geopolitical risks, while also reducing bets on a rate hike by the Fed at its September meeting. U.S. equity futures are trading higher, also supported by a rebound in technology companies, with the S&P 500 up 0.4% and the Nasdaq 100 gaining 1.0%. Despite attacks in the Red Sea and Gulf of Oman, oil prices are losing some momentum, with Brent crude down -0.30% at $88.67 per barrel, while WTI falls -0.30% to $82.80. In fixed income, the 10-year U.S. Treasury yield falls by nearly three basis points to 4.66%.
Monitor
Bolsas / Exchanges
S&P 500
7,782
0.40%
Nasdaq
29,909
1.00%
Dow Jones
54,029
0.30%
IPyC
65,938
0.60%
Monedas / FX (Foreign Exchange)
USD/MXN
17.0199
-0.40%
EUR/MXN
19.6784
-0.20%
EUR/USD
1.1558
0.20%
Índice DXY
99.68
-0.20%
Tasas / Exchange Rates
Treasury 2 años
4.18
-4.2 bp
Treasury 10 años
4.66
-2.8 bp
TIIE 3 meses
6.58
2.0 bp
M Bono 10 años
9.15
-1.2 bp
Commodities / Commodity Markets
Petróleo (Brent)
88.67
-0.30%
Oro
4,435
1.60%
What you need to know about the economy and markets
U.S. inflation confirmed a gradual moderation in July. The headline index increased 0.1% month-over-month, following a 0.4% decline in June, bringing the annual rate to 3.4%, one tenth below the previous month and in line with expectations. The core component increased 0.2% after remaining unchanged in June, although its annual rate continued to decline, from 2.6% to 2.5%. Housing, which accounted for nearly two-thirds of the monthly increase, rose 0.1% for the second consecutive month.
Our Take
The report confirms that U.S. inflation remains on a gradual downward path and that the impact of the energy crisis stemming from the war in Iran continued to ease, although inflation remains above the Federal Reserve's 2.0% target. With these figures, expectations that the Fed will not be in a hurry to raise interest rates in the short term are becoming more firmly established.
A sharp increase in fuel prices pushed Germany's inflation rate to 2.8% year-over-year in July, up from 2.3% in June, its highest level in three months. The rebound was mainly driven by the end of the government fuel discount on June 30, amid higher oil prices.
Our Take
The rebound in German inflation reinforces signs of greater inflationary pressures across the eurozone, although the impact of fuel prices is primarily transitory. The data could reduce the ECB's room to ease its monetary policy stance.
Uncertainty over oil supplies is rising again following new attacks in the Red Sea and Gulf of Oman, carried out by the Houthis and the United States, respectively, increasing the risk of a regional escalation. Although efforts to reopen the Strait of Hormuz are progressing, the recent incidents have reduced optimism about a potential agreement between Washington and Tehran. In contrast, Trump said the U.S. maintains full control of the strait, while Iran stated that any agreement with Oman would be independent of its full reopening.
Our Take
These incidents highlight the impact of the war on two strategic maritime routes, despite some signs of diplomatic progress toward reopening the Strait of Hormuz. However, the positions of the U.S. and Iran remain deeply divided, and the conflict shows no clear signs of coming to an end.
The International Energy Agency (IEA) revised down its oil supply and demand forecasts for the remainder of 2026, amid the closure of the Strait of Hormuz and the lack of an agreement to reopen it. The agency estimates that global supply will fall by 4.3 million barrels per day, to 102 million, while the global deficit would reach 1.8 million barrels per day in the third quarter, more than double the 800 thousand barrels estimated last month.
Our Take
Without an agreement that allows the Strait of Hormuz to reopen and maritime traffic to normalize, the IEA once again cut its supply estimates for the remainder of 2026, reinforcing pressure on the oil market. Although the market is expected to return to surplus toward the end of the year, risks remain elevated given the rapid depletion of available inventories.
Corporate News
Shares of CoreWeave are up around 17% in pre-market trading after the company reported strong revenue growth, with revenue more than doubling year-over-year to $2.58 billion in the second quarter, driven by growing demand for artificial intelligence computing infrastructure. In addition, its order backlog reached $104.2 billion, a 246% year-over-year increase.
Super Micro Computer reported quarterly revenue of $11.1 billion, annual growth of nearly 93%, and adjusted earnings per share of $1.70, above expectations. The strong outlook reinforces expectations for sustained demand for servers and data centers linked to the expansion of AI.
Tencent kicked off the earnings season for Chinese technology companies with a strong second-quarter performance: revenue grew 11% year-over-year, driven by a 22% increase in advertising services and 17% growth in domestic gaming. The results point to still-resilient consumer demand, although the sharp increase in AI investment is beginning to put pressure on margins and earnings.
The To-do List
Follow the market's reaction to the July inflation data: it reinforces the view that the Fed is in no hurry to raise rates in September.
It's Wednesday, the week's turning point: review what was left pending on Monday and Tuesday, and decide what needs to be resolved before Friday.
Tonight, make rice pudding with cinnamon and piloncillo, the most comforting dessert in Mexican cuisine and perfect for a midweek evening.
Dedicate 30 minutes to a kickboxing session at home or with a guided video, one of the best workouts for releasing accumulated tension.
Today's Quote...
"What doesn't kill you makes you stronger."
— Friedrich Nietzsche
Alejandra Marcos amarcos@kapital.com
James Salazar jsalazars@kapital.com
Guillermo Quechol gquechol@kapital.com
Nahely Suasnavar nsuasnavara@kapital.com
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