Market consensus expects a prolonged Banxico pause and reduces inflation forecast for 2026-2027.
The Citi Mexico Expectations Survey revises downward headline and core inflation projections, while GDP growth remains unchanged at 1.1% for 2026.
Key points
UK inflation moderates to 2.6% annually in June due to lower fuel prices.
The US expands its attacks on Iran; Brent touches $95.
Washington prepares a new round of tariffs that would directly impact Mexico.
Japan records its second consecutive trade deficit in June amid a sharp rise in imports.
For the rest of the day, the interbank exchange rate (pesos per dollar) could trade between $17.35 and $17.48 spot.
The persistence of tensions in the Middle East, combined with the risk that a potential Red Sea blockade could worsen disruptions in international trade, continues to pressure market sentiment. However, investor attention is beginning to shift toward the corporate earnings season, with particular interest in the Alphabet and Tesla reports to be published at the close of the session, which face elevated expectations. In this context, US stock market futures are operating with losses this Wednesday, with the S&P 500 retreating 0.4% and the Nasdaq 100 shedding 1.05%. In commodities, Brent briefly surpassed $95 per barrel; meanwhile, WTI was advancing 3.5% to $87.33 per barrel. In fixed income, the 10-year Treasury yield was holding near its highest level in two months at 4.63%. In the currency market, the yen was recovering part of the losses recorded after surpassing the 163 units per dollar threshold, its weakest level since 1986, on expectations that the Bank of Japan will accelerate the pace of its monetary policy normalization.
Monitor
Bolsas / Exchanges
S&P 500
7,520
-0.30%
Nasdaq
29,045
-0.90%
Dow Jones
52,369
-0.10%
IPyC
67,248
0.80%
Monedas / FX (Foreign Exchange)
USD/MXN
17.4132
0.10%
EUR/MXN
19.8573
0.20%
EUR/USD
1.1409
0.10%
Índice DXY
101.13
-0.10%
Tasas / Exchange Rates
Treasury 2 años
4.28
2.0bp
Treasury 10 años
4.64
1.4bp
TIIE 3 meses
6.5
2.0bp
M Bono 10 años
9.16
0.9bp
Commodities / Commodity Markets
Petróleo (Brent)
94.00
3.30%
Oro
4,119
1.10%
What you need to know about the economy and markets
The latest Citi Expectations Survey showed slight adjustments for Mexico's economic environment in 2026. Analysts kept their GDP growth estimates unchanged at 1.1% for 2026 and 1.8% for 2027, as well as the expectation of an overnight rate of 6.50% at the close of both years. In contrast, inflation projections were revised slightly downward: expected headline inflation for 2026 decreased from 4.15% to 4.09% and for 2027 from 3.84% to 3.80%. Additionally, consensus marginally adjusted its exchange rate expectation for end-2026 to 17.90 pesos per dollar from 17.92, while the 2027 forecast remained at 18.50.
Our Take
The survey reflects that the market maintains the expectation of a stable monetary stance from the Bank of Mexico, supported by a gradual moderation in inflation prospects. At the same time, the stability in growth and exchange rate forecasts suggests that analysts continue to anticipate moderate economic expansion and a relatively stable financial environment, though with risks that still justify caution before considering adjustments to the overnight rate.
In the United Kingdom, consumer inflation advanced 0.1% monthly in June, below the 0.2% expected by consensus. On an annual basis, the index moderated to 2.6% from 2.8% in May. The deceleration was driven primarily by a smaller increase in transportation prices, reflecting the fall in fuel prices, particularly diesel. Meanwhile, core inflation remained unchanged at 2.6% annually, in line with the prior month's reading.
Our Take
The latest inflation data are good news for supporters of the Bank of England's (BoE) restrictive monetary policy, who are concerned that the energy crisis could become a prolonged period of price pressure. These figures offer no compelling reason to raise interest rates in the short term.
Oil prices extend their July rebound, accumulating a gain of close to 29%, following the US decision to intensify its attacks against Iran and after both parties ruled out the possibility of resuming negotiations in the short term. In this context, US Secretary of State Marco Rubio reiterated that Washington maintains its willingness to engage in dialogue with Tehran, though he accused the Iranian government of breaking the truce.
Our Take
All of this dissipates hopes of a temporary ceasefire in the coming days, particularly after President Trump ruled out the possibility of immediate talks, and with it the risk increases of continuing to see sustained increases in the commodity's price.
The United States is preparing to announce, before this Friday's expiration of the temporary global 10% tariff applied under Section 122, a new round of levies on around 60 countries as a result of an investigation into forced labor practices. According to the proposal, products from Mexico, Canada, the European Union, and Taiwan would face tariffs of at least 10%, while China, India, and Japan would be subject to a rate of 12.5%. The new tariffs would be added to the 50% tariff announced this week on Canadian goods and the 25% imposed last week on Brazilian products.
Our Take
Mexico's inclusion adds an additional uncertainty front to the already complex bilateral tariff framework, at a moment when both governments are negotiating the current extension of the pre-USMCA review scheme. It is not yet clear whether there will be an exemption for goods that comply with the USMCA, as occurred in prior tariff rounds.
Japan's trade balance recorded a deficit of 406.9 billion yen ($2.49 billion) in June, larger than the market consensus expected (deficit of 120 billion yen) and than the one recorded in May (391.8 billion yen), representing the second consecutive month in deficit territory. Exports advanced 19.3% annually, their strongest pace since November 2022, while imports accelerated 25.4% annually, the highest rate since that same reference.
Our Take
The result confirms that the weakness of the yen continues to operate as a double-edged mechanism for the Japanese economy, as on one hand it favors the competitiveness of exports, particularly in the semiconductor segment linked to AI demand, but on the other it disproportionately raises the imported energy and food bill.
Corporate news
Banco Santander reported second-quarter net income above analyst estimates, after adding more than four million clients following the completion in April of the TSB acquisition in the United Kingdom. Earnings thus reached €7.328 billion in the first half of 2026, 15% more than in the same period the prior year.
Sandoz shares fell as much as 4.2% in Zurich, their largest decline since April, after Trump announced that generic drug manufacturers will have two years to move their production to the US or face a 100% import tariff in 2028, rising to 200% in August 2029.
Super Micro Computer released preliminary fourth-quarter results in which it raised its gross margin expectation to a range of 15% to 17% (versus prior guidance of 8.2% to 8.4%) and reported that its order backlog reached a record level, with new orders of more than $60 billion during the quarter.
OpenAI said its advanced artificial intelligence models accidentally "hacked" Hugging Face, an AI tools repository, in an unprecedented incident that generated new calls to set limits on the technology.
The to-do list
Monitor oil throughout the day: Brent touches $95 with a cumulative gain of nearly 29% in July.
Follow the Alphabet and Tesla results to be published at market close.
Tonight, prepare huevos divorciados with green and red salsa, the classic Mexican dish that never fails and takes 15 minutes.
Dedicate 30 minutes to a stationary bike or spinning session at home, one of the best cardio workouts when time is short and the week weighs heavy.
Today's quote…
"Greatness is not what you have, but what you give."
— Oprah Winfrey
Alejandra Marcos amarcos@kapital.com
James Salazar jsalazars@kapital.com
Guillermo Quechol gquechol@kapital.com
Nahely Suasnavar nsuasnavara@kapital.com
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