The US Personal Consumption Expenditure (PCE) price index recorded an annual increase of 4.1% in May 2026, the highest level since April 2023, while core PCE, which excludes food and energy, advanced 3.4%. Both figures were in line with expectations. In terms of spending, real consumption increased 0.3% monthly after stagnating in April. Meanwhile, disposable income recorded its first increase of the year with a rise of 0.3%.

Our Take

The data show that inflation remains above the Fed's target with an upward trend, but coming in line with expectations does not significantly change investors' and traders' current perception of the Fed's future steps, particularly the idea that it would need to raise the interest rate. The market continues to bet that the first hike could come as early as the September meeting.

US GDP grew at a quarterly annualized rate of 2.1% in Q1 2026, according to the third estimate published today by the Bureau of Economic Analysis. This represents an upward revision of 0.5 percentage points from the second estimate, reflecting primarily a downward revision to imports that partially offsets a smaller contribution from private consumption spending.

Our Take

The upward GDP revision is positive, but its internal composition sends more nuanced signals. The factor behind the improvement was not a strengthening of domestic demand, but a downward revision to imports, which as a subtraction in the GDP calculation improved the aggregate figure. More relevant is that private consumption was adjusted downward, a reflection of some moderation in the main GDP component that would need to be monitored for future quarters.

The National Survey of Occupation and Employment (ENOE) showed that the unemployment rate stood at 2.8%, a level similar to that recorded a year earlier, while the underemployment rate was 7.0%. The economic participation rate stood at 59.1%, below the 59.5% observed in May 2025. Additionally, the informal employment rate reached 55.2%, above the 54.9% reported in May 2025, and the critical employment conditions rate increased to 38.7% from 36.3% in the same month of the prior year.

Our Take

The figures are consistent with a resilient labor market, though with signals of lower dynamism and a less favorable employment composition. The unemployment rate, despite rising to an eight-month high, remains near historical lows and the economically active population continues to grow. Meanwhile, some indicators suggest a gradual deterioration in employment quality, particularly the increase in informal employment and the critical employment conditions rate.

The shock experienced by Persian Gulf oil-producing countries from the war in Iran has created the first significant crack in OPEC, with the UAE's departure from the cartel since May, which could be the start of further exits. Iraq could leave the oil organization if it cannot raise its production quota, an aspiration it has already conveyed to OPEC and which responds to the urgency of restoring its economy after the war, shared by countries in the region.

Our Take

The country has been one of the most affected by the closure of Hormuz and now seeks to sell more crude to recover its economy. For now, Iraq's plan would be to remain in OPEC and request a higher production quota, though without ruling out the possibility of leaving the cartel. Saudi Arabia and other OPEC allies should treat this matter with the utmost seriousness.

The GfK consumer confidence index for Germany showed a slight improvement heading into July, though the advance was below expectations. The indicator stood at -29.2 points, compared to the revised -29.7 of June, though below the -27.6 points market consensus had expected.

Our Take

Taken together, the data point to a stabilization of German consumer confidence, though elevated uncertainty continues to limit a more solid recovery of private consumption.

Corporate News

Micron Technology reported positive results, with revenues of US$41.5 billion (+347% year-on-year), earnings of US$25.11 per share (+1,215% year-on-year), and adjusted gross margins of 84.9%. For the fiscal fourth quarter ending in August, guidance of approximately US$50 billion in revenues surpassed consensus by more than 16%. The company secured 16 strategic customer agreements averaging three years in duration, representing US$22 billion in purchase commitments. Micron shares were rising ahead of the open.

Our Take

The numbers are relevant for calibrating the durability of the AI investment cycle. A company that grows its revenues 3.5 times in one year, doubles its margins, and secures multi-year customer commitments does not support the sentiment of a speculative bubble; rather, the signal about the persistence of scarcity through 2028 implies that companies in the value chain have revenue visibility that could justify current multiples.

At its Investor Day, Qualcomm presented long-term projections that double its prior guidance. Annual revenues of US$40 billion in non-mobile phone businesses by 2029, including US$15 billion in AI components for data centers. The company announced that Meta will use its new processor in its data center infrastructure. Qualcomm also acquired Modular Inc. for approximately US$3.9 billion in shares to strengthen its AI software capabilities. Shares rise 14% in pre-market trading in reaction to the announcement.

Apple today raised prices on its Mac, iPad, and home device product lines, the company's first broad price revision in years, in response to the memory chip crisis; however, iPhone prices were not modified.

The to-do list

  • Watch Banxico's decision at 1:00pm: consensus anticipates the rate stays at 6.50%, but the tone of the statement will be just as relevant as the decision itself, especially to evaluate whether the Board reiterates that the cutting cycle has concluded.

  • Follow statements from the Fed's Williams, Goolsbee, and Bowman: May PCE at 4.1% annually came in line with expectations and does not change the narrative, with the market betting on a first hike as early as September and any additional signal will move the curve.

  • It's Thursday, get ahead of as much as possible before the end of the week and don't leave anything important for Friday afternoon.

  • Tonight, prepare tuna tostadas with avocado and serrano chile, quick, no stove required, and perfect for a Thursday night when time is short.

  • Dedicate 30 minutes to a boxing session at home or with a bag, one of the best exercises to release the week's tension and activate the whole body.

Today's quote…

"Discipline is the bridge between goals and accomplishment."

— Jim Rohn