Mexico's private consumption likely stagnated in May on a monthly basis.
The stagnation would come after April's estimated 0.4% monthly growth. On an annual basis, consumption would have expanded 2.2% and 2.6% in the two months, respectively.
Markets and Stocks
US futures are registering modest advances, with the market pausing after three consecutive sessions of gains, awaiting Warsh's first monetary policy decision tomorrow Wednesday. WTI retreats to US$79 and Brent sheds further to near US$80. The 10-year Treasury yield sheds three basis points to 4.44%, with the market adjusting the probability of a Fed hike downward from 80% to 75% on Brent's relief. The Nikkei is operating practically unchanged after the Bank of Japan's hike. SpaceX surpasses $2.5 trillion in market capitalization in three trading days and formally closed the acquisition of Cursor, an AI startup, in a US$60 billion transaction.
Monitor
Bolsas / Exchanges
S&P 500
7,560
0.00%
Nasdaq
30,522
-0.10%
Dow Jones
51,873
0.30%
IPyC
68,240
0.00%
Monedas / FX (Foreign Exchange)
USD/MXN
17.1959
-0.10%
EUR/MXN
19.946
0.10%
EUR/USD
1.16
0.10%
Índice DXY
99.64
0.00%
Tasas / Exchange Rates
Treasury 2 años
4.06
-0.8 bp
Treasury 10 años
4.44
-2.6 bp
TIIE 3 meses
6.53
2.0 bp
M Bono 10 años
8.96
0.0 bp
Commodities / Commodity Markets
Petróleo (Brent)
80.10
-3.70%
Oro
4,350
1.00%
Key points
The Bank of Japan raises its benchmark interest rate to 1%, the highest level in more than 30 years.
Mines, logistical collapse, and destroyed infrastructure: a months-long task to normalize oil supply through Hormuz.
Consumer spending and investment in China retreat in May to levels not seen since the start of the pandemic.
For the rest of the day, the interbank exchange rate (pesos per dollar) could trade between $17.15 and $17.25 spot.
What you need to know about the economy and markets
INEGI estimates that Mexico's private consumption lost momentum in May, after the growth recorded in April. The Early Private Consumption Indicator (IOCP) anticipates, in monthly terms, an advance of 0.4% in April and a variation of 0.0% in May. On an annual basis, growth of 2.2% and 2.6% is projected, respectively.
Our Take
Seasonal factors such as Mother's Day and the Hot Sale, one of the country's main e-commerce campaigns, were not sufficient to boost sales and consumption in May. Additionally, the recent decline in consumer confidence and the moderation of the labor market could limit consumption dynamism during the second quarter of the year.
Japan's central bank has decided to raise its short-term benchmark interest rate to 1%, the highest level in the Asian country since 1995. The measure, widely expected by the market, seeks to address the growing inflationary risks stemming from high oil prices from the Middle East conflict and the weakness of the yen. The monetary authority indicates it will continue adjusting its policy in the face of persistent inflation. The central bank also presented plans to reduce the pace of its monthly bond purchases in coming quarters.
Our Take
The rate hike consolidates the most relevant monetary normalization process of the last decade in Japan. The authority acknowledges that financial conditions remain accommodative, meaning it does not rule out further rate hikes in the short term, though it avoided indicating the timing of the next adjustment.
The United States and Iran have reached a pact that will halt the conflict and allow the reopening of the Strait of Hormuz. Oil, natural gas, and fuels will flow again through the Middle East, avoiding reaching a critical point of depleted reserves. However, the return to normality will not be a simple task, nor is it imminent by any means. Normalization of the oil market will take several months; maritime traffic will be restored, but very gradually in the coming weeks and months, and only if no new surprises arise along the way. The reaction of shipping companies and insurers will be decisive.
Our Take
Even with the Strait of Hormuz reopening, it is unlikely that the normalization of oil flows will be immediate. The increase in production is limited by operational bottlenecks and logistical problems, while oil tanker traffic will remain cautious due to continued uncertainty on security and insurance.
China's activity indicators showed mixed signals in May 2026. On one hand, industrial production grew 4.5% annually, accelerating from 4.1% in April and surpassing market expectations (4.3%), driven primarily by manufacturing (4.4%) and electricity, gas, and water generation and supply (7.6%). In contrast, retail sales fell -0.6% annually, their first contraction since December 2022, affected by a sharp decline in automobile sales (-16.1%) and other discretionary goods. Additionally, gross fixed investment recorded a contraction of -4.1% annually accumulated from January to May, deepening the -1.6% decline observed through April, due primarily to the deterioration of the real estate sector, whose investment retreated -16.2%.
Our Take
The data reflect a Chinese economy with a growing divergence between supply and domestic demand. While industrial production continues to show resilience thanks to the manufacturing sector and some segments linked to technology and exports, private consumption and investment continue to weaken. The decline in retail sales evidences lower household confidence and fragile domestic demand, while the deepening contraction in investment confirms that the real estate crisis continues to significantly affect economic activity.
In Germany, according to the ZEW institute, investor confidence experienced a much stronger-than-expected recovery in June. The ZEW economic sentiment (expectations) index rose in June to 10.5 points from -10.2 points in May. This also marks the first positive reading since tensions from the Middle East conflict sharply deteriorated expectations in March.
Our Take
The recent evolution of the ZEW index highlights the elevated volatility of economic sentiment in Germany over the past year. The improvement reflects a more optimistic view of the economic horizon over the next six months.
Corporate News
SpaceX advances another 10% in pre-market trading, accumulating a gain of more than 55% since its IPO price of US$135, with market capitalization approaching US$2.7 trillion that would place it as the fifth most valuable public company in the world. In parallel, SpaceX formalized the acquisition of Anysphere, the company behind the AI coding agent Cursor, in a US$60 billion transaction. Cursor, launched in 2023, is one of the fastest-growing startups in the sector's history with more than one million active users.
Our Take
The acquisition of Cursor makes SpaceX the only player in the market that combines space launch infrastructure, satellite network, generative AI models, computing capacity for rent to third parties, and now the AI coding tool with the greatest traction in the sector. It is a unique portfolio of assets among existing public companies, which partially explains the valuation premium the market assigns to it.
Olin and Huntsman announced an all-stock merger agreement that will combine their operations under the new name OlinHuntsman Corporation, with Ken Lane, current CEO of Olin, as CEO of the combined entity and Peter Huntsman as non-executive chairman of the board. Combined 2025 revenues would reach approximately US$12.5 billion, with more than US$300 million in identified cost synergies. Huntsman shares fall close to 10% in pre-market trading, while Olin sheds approximately 1%.
Yum Brands announced the sale of its Pizza Hut business to LongRange Capital and Yum China in a US$2.7 billion transaction. The divestiture simplifies Yum Brands' portfolio, which retains KFC, Taco Bell, and Habit Burger as core brands, while monetizing a chain that has lost competitive relevance against the expansion of other pizza options globally.
The to-do list
Follow the normalization of the Strait of Hormuz: the peace agreement is signed, but the actual reopening will take months, with mines, destroyed infrastructure, and cautious insurers as the main bottlenecks, and any stumble in the process will move crude oil prices.
Watch the Bank of Japan's decision: the hike to 1%, the highest level since 1995, consolidates the most relevant monetary normalization cycle of the last decade and opens the door to further hikes, with implications for the global carry trade and flows toward emerging markets.
Tonight, prepare a red pozole, hearty, comforting, and one of the best dishes in Mexican cuisine for a weeknight.
Dedicate 30 minutes to a yoga or Pilates session at home, body and mind appreciate movement after weeks this loaded with geopolitical news.
Today's quote…
"Fall seven times, rise eight." — Japanese proverb
Alejandra Marcos amarcos@kapital.com
James Salazar jsalazars@kapital.com
Guillermo Quechol gquechol@kapital.com
Nahely Suasnavar nsuasnavara@kapital.com
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