The second round of peace negotiations between the US and Iran, which was scheduled to take place this Tuesday in Pakistan, is currently up in the air following the interception of an Iranian vessel in the Strait of Hormuz by US military ships. After the incident, Iran threatened retaliation and also announced it would not participate in a second round of negotiations that the United States had hoped to begin before the two-week ceasefire expired on Tuesday.

Our take

This weekend's events, which brought renewed threats between the parties after they accused each other of failing to comply with ceasefire conditions, confirm that the process of achieving a stable and lasting peace in the Middle East will be complex, and that the Strait of Hormuz will continue to be used as a weapon by Iran. 

The People's Bank of China (PBoC) kept its benchmark interest rates at their historic lows for the eleventh consecutive month in April, a decision in line with analyst expectations. The main one-year interest rate, the reference for most household and corporate loans, was held at 3.0%, while the five-year rate, the reference for mortgage loans, was kept at 3.5%.

Our take

The move reflects caution regarding the impact of the war in the Middle East, even as inflationary pressures have eased and early-year economic growth remains resilient. The central bank has committed to maintaining its supportive and moderately flexible policy to stimulate economic activity while preserving currency stability. 

Germany's Producer Price Index (PPI) rebounded 2.5% in March compared to February, an increase that breaks three consecutive months of monthly declines. Analyst consensus had expected a smaller increase of 1.4%. It is the largest monthly rise since August 2022. The PPI was driven upward mainly by a 7.5% increase in energy prices as a consequence of the Middle East conflict. On an annual basis, the PPI stood at -0.2%, up from -3.3% in February.

Our take

Although oil and gas futures have moderated some of their excesses in recent weeks, the situation remains delicate. If the war between the United States and Iran drags on and the Strait of Hormuz remains closed or severely restricted, pressure on energy costs will remain very much present throughout April. Germany is once again acting as a warning signal for the entire Eurozone. And if the energy rebound ends up filtering through to more components, the European Central Bank's room to ease its monetary policy could narrow again. 

Economy Secretary Marcelo Ebrard and White House Trade Representative Jamieson Greer will lead today, Monday, the second round of bilateral negotiations on the United States-Mexico-Canada Agreement (USMCA) in Mexico City. The meeting will follow up on the first round of negotiations held in Washington during March and will include political and technical meetings on strategic sectors, rules of origin, supply chains, and regional trade coordination.

Our take

The first formal and joint USMCA review will take place on July 1, 2026, marking six years since the agreement entered into force. The Mexican government's position in these negotiating rounds should be to advance supply chain integration to replace imports, eliminate existing tariffs on steel and aluminum, and address restrictions on the domestic agricultural sector. 

Sales at stores affiliated with the National Association of Self-Service and Department Stores (ANTAD) grew 1.7% annually in nominal terms during March on a same-store basis. Although the result represents a slight recovery compared to February's performance, when growth was 1.1%, it remains below the 2.0% growth reported in January of this year. On a total-store basis, which includes openings over the past 12 months, sales increased 3.8% annually. First-quarter results thus reflected growth of 2.0% in same-store sales and 4.1% on a total-store basis.

Our Take 

The performance of ANTAD-affiliated stores is typically considered a thermometer of domestic consumption and, by extension, of the country's economic activity, given that they concentrate a relevant portion of household spending on everyday and durable consumer goods. In this regard, the moderate growth in comparable sales suggests consumption is advancing, but at a slower pace, in an environment where pressures on purchasing power persist. 

Markets and Stocks

With around 10% of the S&P 500 having reported, according to Bloomberg data, first-quarter results are beating estimates by an average of 11%. However, the market is identifying a more important warning signal than the historical numbers, and that is earnings guidance. More analysts are cutting their earnings estimates than raising them. The percentage of companies simultaneously raising their sales and earnings guidance is falling. According to Bloomberg, 40 S&P 500 companies have reduced their outlook for the current quarter, the highest level since the second quarter of 2025.

Corporate News

American Airlines publicly stated that it is not interested in a merger with United Airlines, ruling out the proposal that United CEO Scott Kirby had informally presented to Trump in February. Shares of both airlines were falling in pre-market trading. The merger would have created the world's largest airline by passengers, though it would have faced considerable regulatory scrutiny.

QXO, a building products company, announced the acquisition of TopBuild, a manufacturer and distributor of insulation materials, for approximately US$17 billion. The deal makes QXO the second-largest publicly traded building products distributor in North America.

USA Rare Earth announced the acquisition of Serra Verde, a rare earth mining company, for US$2.8 billion in a combination of US$300 million in cash and approximately 126.8 million shares. As part of the agreement, Serra Verde signed a 15-year supply contract with a vehicle backed by US government agencies.

Eli Lilly announced the acquisition of Kelonia Therapeutics for up to US$7 billion. The transaction considers US$3.25 billion at closing, with the remainder subject to the clinical and commercial progress of its product, a cancer therapy still in clinical trials.

The to-do list

Quote of the day

"Every morning we have two choices: keep sleeping with our dreams, or wake up and pursue them."

— Paulo Coelho