Inflation in Mexico moderates to 3.10% in the first half of July 2026.
Consumer prices in Mexico increased 0.07% during the first half of July, while core inflation advanced 0.16%, reflecting the persistence of inflationary pressures in the services component.
Key points
Economic activity in Mexico retreats -0.3% monthly in May.
European Central Bank follows the script and leaves its benchmark interest rates unchanged.
The international oil price approaches $100 per barrel.
For the rest of the day, the interbank exchange rate (pesos per dollar) could trade between $17.43 and $17.53 spot.
US stock market futures are operating with moderate retreats, with the S&P 500 falling -0.7% and the Nasdaq 100 dropping around 0.3%, as the market evaluates the quarterly results of Alphabet and Tesla, whose initial reception has been negative, given persistent doubts about the high valuations of the technology sector and the profitability of their heavy capital investments. The second-quarter earnings season continues this Thursday with Intel's figures, which will be known after market close. In commodities, Brent is approaching $100 per barrel, after advancing close to 5% intraday and chaining its fifth consecutive session of gains, driven by increased geopolitical tensions following the attack claimed by Iran-backed Houthi militants on two Saudi oil tankers in the Red Sea. In fixed income, the 10-year Treasury yield increases 2 basis points to 4.67%, while the 30-year bond rate has remained above 5% for 27 sessions of 2026, including the last 12 consecutively, the longest streak since 2007.
Monitor
Bolsas / Exchanges
S&P 500
7,467
-1.00%
Nasdaq
28,784
-1.40%
Dow Jones
51,902
-1.00%
IPyC
67,851
0.80%
Monedas / FX (Foreign Exchange)
USD/MXN
17.4839
0.60%
EUR/MXN
19.8846
0.20%
EUR/USD
1.138
-0.30%
Índice DXY
101.39
0.30%
Tasas / Exchange Rates
Treasury 2 años
4.36
5.4bp
Treasury 10 años
4.71
5.3bp
TIIE 3 meses
6.5
2.0bp
M Bono 10 años
9.23
2.9bp
Commodities / Commodity Markets
Petróleo (Brent)
99.83
6.10%
Oro
4,056
-1.80%
What you need to know about the economy and markets
In the first half of July 2026, Mexico's National Consumer Price Index (INPC) increased 0.07% compared to the prior fortnight, bringing annual headline inflation to 3.10%, below the 3.55% observed in the same period of the prior year. Core inflation registered a fortnightly increase of 0.16% and an annual rate of 3.95%, driven by increases in goods and services. In contrast, the non-core component fell 0.23% in the fortnight and its annual variation was just 0.21%, favored primarily by the decline in fruit and vegetable prices.
Our Take
The reading confirms that the disinflation process continues, driven primarily by the moderation of the index's most volatile components. While core inflation stood below 4% for the second consecutive fortnight, pressures in the services component continue to show high persistence, so it is still premature to conclude that a trend change exists. In this context, we estimate that the Bank of Mexico will keep the overnight rate unchanged for the rest of the year.
Mexico's Global Economic Activity Indicator (IGAE) decreased 0.3% monthly in May 2026 on seasonally adjusted figures, following the growth recorded the prior month. On an annual basis, economic activity advanced 2.0%. By component, secondary activities retreated 0.8% monthly and primary activities 0.5%, while tertiary activities grew 0.2%. On an annual basis, primary activities increased 7.7%, tertiary activities 2.6%, and secondary activities remained unchanged.
Our Take
The monthly IGAE decline suggests a moderation in Mexico's economic dynamism during May, primarily due to the weakening of the industrial sector, particularly construction and manufacturing. However, the annual growth and the resilience of the services sector indicate that economic activity continues to expand, though at a heterogeneous pace.
The European Central Bank (ECB) kept its interest rates unchanged, with the deposit rate at 2.25%, in line with market expectations. The institution reiterated that uncertainty remains elevated and that the inflationary impact stemming from the energy crisis has not yet fully reflected in the economy. The ECB indicated that the current monetary policy stance allows it to face the uncertainty environment associated with the geopolitical conflict and reiterated that its upcoming decisions will continue to depend on data evolution, without committing in advance to a specific interest rate trajectory.
Our Take
The evolution of inflation in the Eurozone, as well as the still "scarce evidence" of indirect or second-round effects, appears to be what motivates the institution not to act this month. However, recent geopolitical developments keep the door open to a possible rate hike as early as its September meeting.
The attack against two Saudi oil tankers in the Red Sea increases geopolitical tensions and raises the risk of disruptions in global energy supply. In response, Brent surpasses $98 per barrel, its highest level since early June, following the Houthis of Yemen, aligned with Iran, claiming responsibility for the attacks. In parallel, President Donald Trump warned that the United States could attack Iranian strategic infrastructure if aggressions against vessels in Hormuz continued, while Iran threatened to respond against US-linked energy assets and infrastructure in the region.
Our Take
If Saudi Arabia also loses its alternate route through the Red Sea, the oil market would be left without any relevant relief valve in the region, which would justify an even larger risk premium than the one already incorporated. The continued rebound in oil prices could quickly pass through to global inflation if the escalation persists, generating speculation that central banks would need to raise their interest rates.
Corporate news
Alphabet, Google's parent company, presented results above consensus expectations; however, the market reacted negatively to the increase in its capital expenditure, reflecting the acceleration of its artificial intelligence investments. The company raised its 2026 capital expenditure forecast to a range of $195-205 billion from prior guidance of $190 billion. It also reported negative free cash flow of $5.9 billion, the first since its 2004 IPO. In contrast, the cloud business maintained solid performance, with revenues growing 82% annually to $24.77 billion, surpassing market expectations.
Tesla presented results below expectations. Adjusted earnings per share were 33 cents, versus the expected 51 cents, while free cash flow recorded a deficit of $1.09 billion, the first in two years, following an increase in spending on artificial intelligence, robotics, and the Cybercab project to $5.8 billion. Although revenues grew 26% annually to $28.24 billion and net income reached $1.114 billion (-5% annually), shares retreated more than 5% in pre-market trading.
Texas Instruments, the largest manufacturer of analog and embedded processing semiconductors, presented results that surpassed expectations and raised its third-quarter revenue forecast, supported by a recovery in demand from the industrial, automotive, and data center sectors. However, the market considered that the guidance and prospects were already broadly priced into the stock's valuation, triggering a decline of close to 5% in pre-market trading.
The to-do list
Monitor oil throughout the day: Brent approaches $100 following the Houthi attack on two Saudi tankers in the Red Sea.
Follow Intel's results at the close: in a week where Alphabet disappointed on capital expenditure and Tesla fell below expectations.
Tonight, prepare lentil soup with chorizo and epazote, hearty, economical, and one of the best for a Thursday night when the week already weighs heavy.
Dedicate 30 minutes to a rowing session with resistance bands or on a machine, one of the most complete exercises for working the back, arms, and core simultaneously.
Today's quote…
"He who has a why to live can bear almost any how." — Friedrich Nietzsche
Alejandra Marcos amarcos@kapital.com
James Salazar jsalazars@kapital.com
Guillermo Quechol gquechol@kapital.com
Nahely Suasnavar nsuasnavara@kapital.com
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