Market attention is focused on the Federal Reserve's monetary policy meeting, whose decision is published today at 12:00pm. The interest rate is widely expected to remain unchanged in the 3.50%–3.75% range. In this context, the Fed would adopt a "wait and see" stance, while the market continues to price in possible hikes later in the year. Beyond the decision itself, one of the most relevant elements will be Kevin Warsh's participation in his debut as central bank president, both in his press conference and in any adjustments to the statement's language. Additionally, the new dot plot will be relevant, with estimates of interest rate levels for this and coming years.

Our Take

We expect an unchanged decision, but with a potentially more restrictive tone in the communication. Warsh's arrival introduces an element of uncertainty about the future direction of monetary policy, so the market will be especially attentive to his signals. Additionally, at this meeting Warsh is unlikely to submit his own "dot" in the closely scrutinized dot plot, breaking with the precedent established under Jerome Powell, Janet Yellen, and Ben Bernanke's tenures.

US retail sales increased in May, signaling that consumer demand remains solid despite rising gasoline prices. The increase was 0.9% monthly, following a downward revision of April's growth by one tenth to 0.4%. Eleven of the 13 categories comprising the indicator recorded increases, with a 1.2% advance in auto sales standing out.

Our Take

May's result surpasses expectations and constitutes a signal of resilience of the US consumer, whose demand remains active despite the environment of elevated interest rates, high inflation, and persistent global geopolitical uncertainty.

According to the final reading, Eurozone consumer inflation rose 0.1% in May, in line with its preliminary reading and with what analyst consensus had expected. On an annual basis, inflation increased to 3.2%, following the 3.0% recorded in April. In May 2025 the region's inflation stood at 1.9%. Core CPI rose to 2.6% annually (2.2% in April), one tenth above the prior estimate.

Our Take

Inflation figures in the region do not point to a generalized reactivation of this variable comparable to that observed in the 2022-2023 period due to the war in Ukraine, but they do represent a signal of attention for the European Central Bank (ECB). Thus, the possibility of a new 25 basis point rate hike by the ECB, likely at the September meeting, remains on the table.

In the United Kingdom, consumer inflation advanced 0.2% monthly in May, notably less than the 0.5% increase consensus expected and below the 0.7% recorded in April. With this, the annual rate stands at 2.8%, the same level as in April and below the 3.0% anticipated. Meanwhile, core inflation rebounded in May to 2.6% from the 2.5% recorded in April. The data is known ahead of the Bank of England's (BoE) next meeting, which will take place this Thursday.

Our Take

Inflation held stable in May, as the various price fluctuations offset each other. The report confirms that UK inflation continues to show a trend of gradual moderation, though it remains above the Bank of England's 2% target. These figures consolidate the idea that tomorrow the UK monetary authority will leave the benchmark interest rate unchanged.

In addition to the reopening of the Strait of Hormuz to the free flow of vessels, as part of the agreements to be included in the memorandum of understanding, Iran would receive broad financial incentives from the United States, including the right to sell oil immediately, access to a $300 billion development fund, and eventual access to its frozen assets, according to the final draft of the agreement obtained by Bloomberg.

Our Take

The US and Iran will formally sign the memorandum this Friday, in a ceremony to be held in Geneva (Switzerland), and from that point a 60-day period will open for both parties to negotiate a definitive agreement that ends the hostilities and, as US President Donald Trump has indicated, limits Iran's nuclear program.

Corporate News

SpaceX advances 4.5% in pre-market trading, heading toward its fourth consecutive session of gains since Friday's debut. The company's market capitalization surpassed US$2.5 trillion, overtaking Amazon to become the fifth most valuable public company in the world. In parallel, Nasdaq modified its rules to allow early entry of large-cap company shares such as SpaceX into its indices, which could potentially force funds tracking the Nasdaq 100 to buy the stock.

Our Take

SpaceX's early inclusion in the Nasdaq 100 would create a passive buying flow that could sustain the price even during profit-taking episodes. The most relevant caveat for investors considering entering the stock in the secondary market remains that only 4.2% of total shares is available for trading on the market, according to Bloomberg, meaning the current price reflects an artificially restricted supply.

BMW AG sharply cut its operating margin forecast for fiscal year 2026 to between 1% and 3%, citing deteriorating demand in China, supply chain disruption from the Iran conflict, and the impact of materials costs. BMW shares fell as much as 12% in Frankfurt in their worst session in years, dragging down the entire European automotive sector.

Our Take

BMW's downward revision is not an isolated event but the most visible signal to date of stress running through the entire European automotive industry. The margins built during the 2021-2024 cycle on post-pandemic pent-up demand and pricing power in premium segments are being simultaneously eroded on three fronts: competition from Chinese electric vehicle manufacturers, cooling consumer demand in China as a key export market, and rising input and logistics costs from the Iran conflict.

CME Group announced that its CEO Terry Duffy will step down in March 2027, to be replaced by current CFO Lynne Fitzpatrick. Duffy will continue as executive chairman of the board. CME operates the world's most important futures markets, including the oil, interest rate, currency, and commodity contracts that have been at the epicenter of the volatility generated by the Iran conflict over the past months.

The to-do list

  • Watch the FOMC decision at 12:00pm and Kevin Warsh's press conference: the market does not expect a rate change, but the new Fed chair's debut and any adjustment in the dot plot or the statement's tone will be the most important signal of the day.

  • Follow the details of the US-Iran memorandum: the draft leaked by Bloomberg includes immediate access to the oil market, a $300 billion development fund, and frozen assets, with the formal signing this Friday in Geneva, which will continue to push crude prices lower.

  • It's Wednesday, the inflection point of the week: review what was left pending from Monday and Tuesday, and define what must be resolved before Friday.

  • Tonight, prepare something quick because at 8:00pm Uzbekistan vs. Colombia kicks off at the World Cup, one of the most attractive matches of the day, and you can't miss the start.

  • Dedicate 20 minutes before the match to stretching or a short walk, enter the game with body and mind clear.

Today's quote…

"First they ignored him, then they laughed at him, then they fought him, then he won."

— Mahatma Gandhi