The People's Bank of China (PBoC) kept its main benchmark interest rates at historical lows for the fourteenth consecutive month, in line with market expectations. The one-year Loan Prime Rate (LPR), the reference for most corporate and household loans, was held at 3.0%, while the five-year LPR, used as a reference for mortgage loans, remained at 3.5%.

Our Take

The decision reflects the monetary authority's caution regarding the repercussions of the Middle East conflict. The combination of moderate private consumption, a prolonged correction in the real estate sector, and imported inflationary pressures from abroad limits the room for maneuver of the Asian giant's authority.

International oil prices retreated after a report became known according to which mediators proposed a ten-day pause in attacks between the United States and Iran, following the recent escalation of the conflict. Brent futures fell below $87 per barrel, having traded above $91 during the session. The pause would seek to open space to reactivate the interim peace agreement between both countries, which has practically collapsed in recent weeks. This announcement comes after nine consecutive days of attacks and with the situation in the Middle East becoming increasingly unstable.

Our Take

Crude prices have shown repeated oscillations amid the alternation between escalation and de-escalation of the conflict, which has partially blocked the Strait of Hormuz. If this escalation continues unchecked, we could return to a scenario of high-intensity attacks throughout the Persian Gulf.

In Germany, producer prices fell 0.3% in June compared to May, versus the 0.3% advance recorded the prior month. This is the first decline since February. On an annual basis, prices increased 1.8%, chaining three consecutive months of increases. The annual rebound was driven primarily by intermediate goods, with an increase of 5.1%, and by petroleum derivatives, which rose 23.7% amid the armed conflict.

Our Take

The monthly decline and the fact that consumer goods continue in negative annual territory suggest that German domestic demand remains weak, so the rebound of the headline index should not be interpreted as a signal of industrial cycle reactivation.

Andy Burnham assumed office today as UK Prime Minister and, in his first speech in the role, committed to ending the country's political instability through a new economic model. Burnham becomes the seventh British Prime Minister in just over a decade. He indicated that toward the end of the year he will present a ten-year plan aimed at restoring the country's economy and confidence, as well as measures with implications for the cost of living that he will announce starting tomorrow.

Our Take

The change at Downing Street confirms a pattern of high rotation at the head of the British government, which tends to be associated with higher risk premiums in the gilt market and pressure on the pound sterling given uncertainty about the continuity of the UK's fiscal policy.

Corporate news

Airline Ryanair reported that its first-quarter profit fell 34%, after the Middle East conflict raised oil prices and weakened demand, forcing the low-cost airline to cut fares during the peak summer travel season.

Alibaba shares rose as much as 5.4% after the company launched a preliminary version of its artificial intelligence model Qwen3.8 Max, describing it as the second best after Anthropic's Fable 5. Although these models seek to use computing more efficiently, they continue to require large amounts of memory to operate.

Bristol Myers Squibb announced it will build what it describes as the most powerful artificial intelligence factory in the life sciences sector, in collaboration with Nvidia. The company will deploy Nvidia DGX Vera Rubin NVL72 systems to scale its own AI models and compress drug discovery timelines.

Prysmian signed an agreement of up to €5.5 billion ($6.3 billion) with Molex, a subsidiary of Koch Inc., for the supply of optical cables destined for data centers, in line with the increase in AI infrastructure investment.

The to-do list

  • Follow the third USMCA negotiation round in Mexico City that begins tomorrow: steel, aluminum, automotive, and agriculture are the most sensitive topics on the agenda.

  • Monitor oil throughout the day: mediators proposed a ten-day pause in attacks between the US and Iran after nine consecutive days of clashes.

  • Tonight, prepare bean sopes with chorizo and cheese, hearty, inexpensive, and one of the best pleasures of Monday Mexican cooking.

  • Dedicate 30 minutes to a yoga or Pilates session at home, after a World Cup final weekend the body appreciates moving calmly.

Today's quote…

"There are no shortcuts to any place worth going."

— Beverly Sills