Cost pressures intensified even before the conflict in Iran.
Markets and Stocks
U.S. futures posted slight declines after Iran attacked infrastructure at the South Pars gas field in the United Arab Emirates, pushing Brent crude back toward 107 dollars per barrel. Today’s data delivered an upside surprise: the February Producer Price Index rose 0.7% month-over-month, more than double the 0.3% expected by consensus. The key event of the day will be the Federal Reserve’s monetary policy decision, followed by Chair Jerome Powell’s press conference. No rate changes are expected, but the tone of the communication and updated projections will be crucial in assessing the path of monetary policy in an environment that has changed significantly since the January meeting. Meanwhile, the Bank of Canada will also announce its rate decision today.
Key points
At 12:00pm, the Federal Reserve announces its monetary policy decision.
Oil prices stabilize somewhat after Iraq resumes crude exports through Turkey.
Eurozone inflation is confirmed to have risen in February to 1.9% year-over-year.
Japan’s exports grew 4.2% in February, exceeding expectations.
The Bank of Canada concludes its policy meeting today at 7:45am, with expectations of keeping its benchmark rate unchanged.
Monitor
Bolsas / Exchanges
Activo
Valor
Variación_pct
S&P 500
6,693
-0.40%
Nasdaq
24,688
-0.40%
Dow Jones
46,820
-0.50%
IPyC
66,306
0.00%
Monedas / FX (Foreign Exchange)
Activo
Valor
Variación_pct
USD/MXN
17.7331
0.50%
EUR/MXN
20.3985
0.20%
EUR/USD
1.1501
-0.30%
Índice DXY
99.81
0.20%
Tasas / Exchange Rates
Activo
Valor
Variación_pct
Treasury 2 años
3.72
5.3bp
Treasury 10 años
4.23
2.4bp
TIIE 3 meses
7.11
2.0bp
M Bono 10 años
9.45
0.0bp
Commodities / Commodity Markets
Activo
Valor
Variación_pct
Petróleo (Brent)
107.88
4.30%
Oro
4,861.00
-2.90%
What you need to know about the economy and markets
U.S. producer prices accelerated unexpectedly in February compared with the previous month, reflecting rising costs for goods and services. The index rose 0.7% month-over-month following a 0.5% increase in January. On an annual basis, it reached 3.4%, the highest level in a year. A core measure of wholesale inflation, which excludes food and energy, increased 0.5%.
Our take
The producer price data follows recent figures showing that core consumer inflation slowed in February compared with the previous month. However, that occurred before the war in Iran, which has driven up energy prices and begun to affect consumer confidence.
All indications suggest that the Federal Reserve will leave its benchmark interest rate unchanged within the 3.50%–3.75% range. Market participants will closely follow Chair Jerome Powell’s remarks at 12:30pm for signals on how policymakers view the growing inflation risks driven by oil prices amid the conflict. The Fed will also update its macroeconomic projections and its dot plot, which reflects where officials expect interest rates to be in the coming years.
Our take
The Fed is likely to remain on pause and proceed cautiously. The escalation of the conflict in Iran is cooling expectations for rate cuts. We anticipate that in the new dot plot, the central bank will maintain its expectation of one rate cut for the remainder of 2026.
International oil prices are attempting to stabilize after the Iraqi government and Kurdish authorities reached an agreement to resume oil exports through Turkey’s Ceyhan port. However, Brent crude continues to trade above 100 dollars per barrel, while WTI trades around 98 dollars.
Our take
The reorganization of export routes, with Iraq resuming shipments via Turkey and Saudi Arabia redirecting flows toward the Red Sea, could partially ease tensions. However, a full restoration of supply will take time, and there remains a risk of shortages in the physical market, which will keep upward pressure on prices.
The Eurozone Consumer Price Index rose 0.6% month-over-month in February, according to the final estimate, slightly below the initial 0.7% estimate. On an annual basis, inflation increased to 1.9% from 1.7% in January. Core inflation stood at 2.4% year-over-year, up from 2.2% in January.
Our take
Eurozone inflation remains below the European Central Bank’s target, despite rising by two tenths in February. The ECB meets this Thursday, and all expectations point to rates remaining unchanged at 2%.
In Japan, exports rose 4.2% year-over-year in February, well above the 1.6% expected. While shipments to China and the United States declined, exports to other regions in Asia, the Americas, and Europe remained strong. Key export sectors included automobiles, industrial equipment, electronics, and food products.
Our take
This performance highlights the resilience of Japan’s external sector in a global environment marked by trade tensions and uneven demand.
Markets and Stocks
Brent crude traded near 107 dollars per barrel, with pronounced intraday volatility following Iran’s attacks on the South Pars field, accumulating gains of more than 40% since the start of the conflict. Gold traded below 4,900 dollars per ounce, near one-month lows, pressured by a stronger dollar despite its safe-haven status. Silver followed gold with an even sharper decline.
Corporate News
According to Reuters, Nvidia received regulatory approval from Beijing to resume sales of its H200 chips, its second most powerful AI processors, in China—a market that once accounted for 13% of the company’s total revenue before restrictions. CEO Jensen Huang confirmed that the supply chain is already ramping up to meet orders from multiple Chinese clients, including ByteDance, Tencent, and Alibaba.
Unilever is in early-stage discussions to separate most or all of its food assets, aiming to focus the company on beauty, personal care, and wellness. Options under consideration include spinning off the food business or exploring interest from external buyers. The company already separated its ice cream division last year, retaining a minority stake.
BHP appointed Brandon Craig as its new chief executive officer effective July 1, replacing Mike Henry, who led the company for more than six years.
Tencent reported a 13% increase in quarterly revenue, driven by its advertising and gaming divisions, while accelerating investment in artificial intelligence agents. The company recently launched several products aimed at capturing momentum generated by AI trends, including integrating its own AI agent into WeChat. Tencent shares have posted their strongest relative performance against Alibaba in two years, also supported by the rally in Chinese AI-related stocks.
The to-do list
Stay attentive to the start of Mexico’s 89th Banking Convention.
At 12:00pm, full attention to the Federal Reserve decision: no change expected, but the dot plot and Powell’s remarks will move markets.
At the end of the day, review how markets reacted to Powell’s tone before shutting down screens.
Midweek check: assess whether you are on track with Monday’s tasks and reset priorities for Thursday and Friday.
Evaluate the implications of China’s approval of Nvidia’s H200 chips for positions in semiconductors and the broader AI infrastructure ecosystem.
Quote of the day
“In times of uncertainty, patience is not passivity, it is strategy.”
Peter Lynch.
Important Notice
This document is confidential and intended solely for the use of clients and prospective clients of Kapital México Grupo Financiero (“Kapital”). The opinions contained herein reflect exclusively the views of the analysts as of the date of preparation, and such analysts do not receive any compensation from persons other than Kapital. Kapital hereby declares the following:
Kapital does not hold investments in the securities covered by this analytical report that represent one percent (1%) or more of its securities portfolio.
Analysts may hold investments in certain issuers whose securities are the subject matter of this Analytical Report.
No member of the Board of Directors, Chief Executive Officer, or senior officer of Kapital or of the entities comprising Kapital, occupying positions immediately below such level, holds any relevant position in the issuers of the securities covered by this analytical report.
During the past twelve months, where applicable, there have been changes in the direction of the opinions expressed in the analytical reports regarding the issuers covered by this analytical report, in accordance with prevailing economic, political, and social market conditions.
The contents of this document are provided for informational purposes only and do not constitute an offer or investment recommendation. Kapital assumes no liability for decisions made based on this information. Past performance does not guarantee future results.
