Industrial activity in Mexico, as measured by INEGI's Monthly Industrial Activity Indicator, fell 0.6% monthly in March 2026, accumulating an annual contraction of 1.5%. By component, the sharp fall in construction stood out (-3.3% monthly), along with a marginal retreat in manufacturing (-0.2%), while mining (1.7%) and energy (0.3%) showed advances. On an annual basis, weakness was concentrated in construction (-5.3%) and manufacturing (-1.6%), reflecting uneven performance within the sector.

Our Take

The decline in industrial activity reinforces the signal of weakness in the economy at the start of the year, particularly due to the deterioration in construction and manufacturing, key sectors for growth. While mining has shown resilience, its dynamism has not been sufficient to offset the other components. This result suggests that productive activity continues to lose traction in the short term, in an environment marked by weaker external demand and elevated global uncertainty.

In March 2026, international tourism showed mixed behavior. On one hand, traveler arrivals to Mexico grew 11.9% annually, driven primarily by excursionists and border tourists, while non-border tourists recorded a decline. However, total spending by international visitors fell 3.4%, reflecting a contraction in tourist spending (-5.1%) and a relevant decline in average spending (-13.7%). In contrast, outbound tourism maintained strong dynamism: departures of residents grew 15.1% and total spending increased 25.5%, accompanied by higher average spending.

Our Take

The data reflect a recomposition of tourism, where growth in arrivals is concentrated in segments with lower economic spillover, which explains the decline in total and average spending. At the same time, the solid advance of outbound tourism suggests resilient domestic demand and higher spending abroad, which could pressure the tourism services balance.

Financial markets remain on alert amid the lack of de-escalation signals in the conflict between the United States and Iran. Positions remain far apart, with the former demanding the reopening of the Strait of Hormuz and the dismantling of Iran's nuclear program, and the latter demanding the withdrawal of the US military presence as a prior step to any agreement. President Donald Trump even commented that the ceasefire with Iran is "in intensive care."

Our Take

News about the Middle East conflict continues to condition market behavior. We remain without an agreement and with a crossfire of threats between both parties, with Trump warning that the ceasefire with Iran is in a very fragile state, and the Iranian government indicating it is prepared for any scenario.

The ZEW Institute published that its German economic sentiment index, which measures the expectations that major investors and analysts hold regarding the country's economy, rose in May to -10.2 points from -17.2 points in April, when it had reached its lowest level in three years. The index thus chains three consecutive months of negative readings, coinciding with the start of the war in the Middle East.

Our Take

Expectations regarding Germany's economy are improving, but remain negative. Weak industrial production, rising energy prices, and inflation above 2.0% continue to weigh on Germany's economy.

Germany's Consumer Price Index (CPI) rose 0.6% in April compared to March, according to the final figure, in line with its preliminary reading and with what analyst consensus had expected. The increase was driven by energy prices, which rose 2.1% in the month. On an annual basis, inflation rebounded in April to 2.9% (2.7% in March), a figure also in line with its preliminary report and with consensus projections. Germany's inflation thus reached its highest level since January 2024.

Our Take

The rise in inflation was mainly due to another sharp increase in energy prices, which surged 10.1% amid higher oil prices, a consequence of the war in Iran. The good news is that comparison with previous oil and economic crises shows that the increase in energy product prices has been smaller than what was recorded immediately after the start of the war in Ukraine.

UK sovereign bond yields are rising this Tuesday amid growing political pressure on Prime Minister Keir Starmer to step down, an option he himself has ruled out. The 10-year gilt yield increased 11 basis points to 5.11%, while the 30-year gilt, a barometer of fiscal concerns, advanced 10 basis points to 5.78%, approaching the high since 1998 reached last week. This comes after around 80 Labour legislators have publicly demanded Starmer's resignation following the worst results for a governing party in local elections in more than three decades, opening the debate about a possible leadership change in the Labour Party.

Our Take

The bond market is reacting not only to Starmer's possible departure, but also to who his successor might be and the prospect of a prolonged leadership battle that could lead to more fiscal promises the UK cannot afford.

Markets and companies

eBay rejected GameStop's US$56 billion offer, describing it as "neither credible nor attractive," citing uncertainty over financing. TD Bank's high-confidence letter for US$20 billion is conditioned on the combined company having an investment-grade rating, something Moody's has already flagged as unlikely, the operational risks of the transaction, and GameStop's corporate governance issues. Cohen had anticipated taking the offer directly to shareholders if the board rejected it, which could initiate a proxy battle. According to Financial Times reports, Nelson Peltz's Trian Fund Management is seeking backing from external investors, including in the Middle East, to finance a possible offer to take Wendy's private. Trian controls 16% of Wendy's and has board members including Peltz's son. Wendy's shares have fallen more than 40% over the past year amid weakness in customer traffic and rising raw material costs. The company has an enterprise value of around US$5.1 billion, according to the FT.

Corporate News

Under Armour projected a marginal decline in revenues for fiscal year 2027, versus the consensus expectation of 1.6% growth, and earnings per share of between 8 and 12 cents, below the estimated 23 cents. The company indicated that the Iran conflict will add approximately US$35 million in costs during the year, while potential tariff refunds would contribute around US$70 million in benefit. In North America, its main market, annual sales would fall in the low single-digit percentage range. In the last quarter, revenues fell 1% year-on-year, in line with estimates, though the loss was larger than expected. Shares were falling between 14% and 17% in pre-market trading.

The to-do list

Today's quote…

"Don't wait for the perfect moment, take the moment and make it perfect."

— Zoey Sayward