Mexico's economy would have expanded 1.7% annually in June.
According to the Early Economic Activity Indicator (IOAE), Mexico's economy would have accumulated growth of 1.1% during the first half of 2026, pointing to moderate expansion.
Key points
Mexico's retail sales fall -0.6% monthly in May.
Trump approves new 50% tariffs on Canada in the midst of USMCA negotiations.
Investor confidence in Germany's economic outlook improves.
The US and Iran extend attacks for the tenth consecutive day.
For the rest of the day, the interbank exchange rate (pesos per dollar) could trade between $17.36 and $17.46 spot.
US futures are pointing to a rebound this Tuesday after yesterday's declines, with Nasdaq futures leading the advance on a recovery in semiconductor stocks, as the market prepares for the accounts of the major technology companies, where Alphabet and Tesla present their figures tomorrow Wednesday. The S&P 500 advances 0.5% and the Nasdaq 1.3%. In the oil market, Brent extended its advance and rose 1.2% to surpass $90 per barrel, while WTI gained 1.1% to $84.15, as the US and Iran reach a tenth consecutive day of mutual attacks despite mediators' efforts to revive a truce. In fixed income, the 10-year Treasury yield held practically unchanged at 4.60%, the German 10-year bond advanced 1 basis point to 3.16%, and the UK bond remained stable at 5.03%.
Monitor
Bolsas / Exchanges
S&P 500
7,516
0.40%
Nasdaq
29,177
1.40%
Dow Jones
52,201
0.30%
IPyC
66,641
0.80%
Monedas / FX (Foreign Exchange)
USD/MXN
17.3882
-0.20%
EUR/MXN
19.8392
-0.20%
EUR/USD
1.1415
0.00%
Índice DXY
101.02
0.10%
Tasas / Exchange Rates
Treasury 2 años
4.22
0.6bp
Treasury 10 años
4.61
0.8bp
TIIE 3 meses
6.54
2.0bp
M Bono 10 años
9.14
-0.9bp
Commodities / Commodity Markets
Petróleo (Brent)
90.87
1.90%
Oro
4,060
1.40%
What you need to know about the economy and markets
Mexico's Early Economic Activity Indicator (IOAE) estimates that Mexico's economy maintained positive performance in June 2026. The IGAE would have registered annual growth of 1.7% and monthly growth of 0.2%, after May's estimate of 1.6% annual advance and a monthly contraction of 0.3%. By component, tertiary activities would have grown 2.2% annually, while secondary activities would advance 0.5% annually. On a monthly basis, both secondary and tertiary activities would register an increase of 0.2% during June.
Our Take
The IOAE early estimate suggests that economic activity regained dynamism in June after the contraction observed in May. Taken together, the figures are consistent with a positive growth scenario during the second quarter, though without signals of significant acceleration in economic activity.
On seasonally adjusted figures, Mexico's retail sales fell 0.6% monthly, though on an annual basis they grew 2.4%. By sector, the largest annual advances were observed in internet and catalog sales (12%), as well as health care products (7.7%). In contrast, categories related to groceries, food, and beverages showed weaker performance (-7.1%), limiting retail trade growth.
Our Take
The monthly decline in retail sales suggests a loss of consumption dynamism at the start of the second quarter, in line with other indicators pointing to a gradual moderation of domestic demand. However, the 2.4% annual growth indicates that the commercial sector continues to expand compared to the prior year, supported by a labor market that continues to show strength and by the increase in real wages.
The United States announced it will impose 50% tariffs on imports of wine, hockey sticks, cement, and other goods from Canada as a trade retaliation. These measures seek to counteract restrictions imposed by Canada on US imports of alcohol, automobiles, and dairy products. The new levies are applied under Section 338 of the Trade Act of 1930 (a provision never before used to impose tariffs) and will take effect 30 days after signing. Unlike prior rounds of tariffs, this time there will be no exception for goods that comply with USMCA rules of origin.
Our Take
The main impact does not lie in the immediate scope of the measure, but in the precedent it sets. While the new tariffs would affect only 5% of Canadian exports to the United States, the elimination of the exemption for goods that comply with the USMCA suggests that treaty compliance no longer guarantees, in itself, tariff-free access, raising uncertainty about North America's trade framework.
According to the Centre for European Economic Research (ZEW), the economic sentiment index for Germany rebounded strongly in July, rising to 26.3 points from 10.5 points in June. The figure broadly surpassed the 11.0 points analyst consensus had expected and reached its highest level since February, before the Middle East conflict deteriorated economic expectations.
Our Take
The ZEW reflects that the reform package pushed by the German government is beginning to support the growth prospects of the Eurozone's largest economy. Specifically, the advance was sustained by better prospects for export-oriented sectors and by the resilience of domestic demand.
Regarding the armed conflict in the Middle East, investors are grappling with contradictory signals, with mediation hopes facing the escalation of US-Iran attacks in a war now entering its fifth month. Meanwhile, Yemen's Houthis, backed by Iran, announced a naval blockade against Saudi Arabia, generating new concerns about possible disruptions to energy shipments through the Middle East.
Our Take
Markets cling to hopes of a prompt resolution of the Iran conflict, but the market has been here many times since the war broke out, and the risk of another disappointment persists.
Corporate news
Alsea reported weak second-quarter 2026 results, with consolidated net income of 532 million pesos, a decline of more than 50% annually, while operating cash flow (EBITDA) retreated 6.3% compared to the same period of 2025. With these results, the company adjusted downward its earnings growth forecasts for the rest of 2026.
Our Take
Alsea's report confirms the fragility of private consumption in Mexico, particularly in the cafeteria and fast food segment, which is more sensitive to disposable income than the full-service restaurant segment. The downward adjustment in the company's earnings guidance for the rest of the year, combined with exchange rate exposure, keeps the risk skewed to the downside for Mexico's discretionary consumption sector.
General Motors raised its full-year earnings forecast by an additional $500 million after surpassing second-quarter estimates, with earnings per share of $3.57 versus the consensus of $3.19 and revenue of $48.03 billion versus the expected $46.61 billion. The company now projects earnings before interest and taxes of up to $16 billion this year, driven by better margins on its larger trucks and SUVs and lower tariff costs.
TSMC held conversations with clients about price increases of up to 10% in 2027 for its advanced and mature chip manufacturing services, in order to reflect the increase in production material costs. The announcement follows a price increase reported last week by ASML, whose largest customer is TSMC itself.
The to-do list
Follow closely the 50% tariffs announced by the US on Canada under Section 338.
Monitor oil throughout the day: the US and Iran reach their 10th consecutive day of attacks and the Houthis announced a naval blockade against Saudi Arabia.
Tonight, prepare pasta with mushrooms and cream, quick, comforting, and perfect for a Tuesday night when time is short.
Dedicate 30 minutes to a swimming or pool exercise session, one of the most complete and lowest-impact workouts for the joints.
Today's quote…
"Do today what others don't want to do and tomorrow you will have what others cannot have." — Jerry Rice
Alejandra Marcos amarcos@kapital.com
James Salazar jsalazars@kapital.com
Guillermo Quechol gquechol@kapital.com
Nahely Suasnavar nsuasnavara@kapital.com
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.
