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Mexico’s labor market maintained a moderate pace of expansion in August. The employed population reached 60.7 million people, 1.2 million more than a year earlier, while the unemployment rate edged up from 2.9% to 3.0%. However, job quality remained weak, with 33.4 million people working informally, equivalent to 55.0% of the employed population, while 18.4 million worked specifically in the informal sector, accounting for 30.3% of the total.

Our Take

The increase in employment confirms the resilience of the labor market, but the low unemployment rate continues to mask significant job-quality challenges. More than half of workers remain in informal employment, while employment in the informal sector increased from a year earlier, limiting productivity, access to social security and the ability of employment growth to sustain stronger consumption.

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U.S. business equipment orders rose 1.6% in August, well above the 0.6% expected, following an upwardly revised 0.6% increase in July, allowing capital spending momentum to remain firm this year. Total durable goods orders were unchanged, compared with an expected 0.3% decline, while capital goods shipments rose 0.6%, slightly below the 0.8% consensus estimate.

Our Take

The strong increase in orders confirms that business investment remains dynamic and supports the U.S. growth outlook. However, the softer increase in shipments moderates its immediate contribution to GDP. Overall, the report reinforces expectations of a resilient economy and gives the Fed further grounds to maintain a restrictive stance.

U.S. and Iranian negotiators are exploring a phased solution that would include Iran reopening the Strait of Hormuz and the United States lifting its economic blockade. In this context, Iranian Foreign Minister Abbas Araghchi has proposed reopening the strait and resuming nuclear talks with the United States within seven days if the Trump administration accepts Iran’s conditions.

Our Take

For a sustained bearish scenario in oil to take hold, new announcements about a potential phased agreement will not be enough. Markets need signs that restrictions in the Strait of Hormuz are easing, shipping activity is normalizing and the conflict in Yemen does not open a new source of risk to regional supply.

Germany’s GfK consumer confidence index deteriorated sharply heading into October, falling to -30.6 points from a revised -26.8 in September. The result came in below the consensus forecast of -27.2 and marked its lowest level since May, driven mainly by a sharp deterioration in household income expectations.

Our Take

Most households expect that high energy prices will reduce their purchasing power. This backdrop has increased pessimism over the outlook for household incomes over the next twelve months and could constrain the recovery in private consumption.

The dollar index is posting its best run since March, supported by rising bets that the Federal Reserve will raise interest rates again. The strength of the U.S. economy, renewed inflationary pressures and higher bond yields have increased the relative appeal of dollar-denominated assets.

Our Take

The appreciation of the U.S. dollar is tightening global financial conditions and increasing pressure on emerging-market currencies, including the Mexican peso. If the move persists, it could increase FX volatility, raise external financing costs and reduce Banxico’s room to consider rate cuts, although this does not imply that it must mechanically follow the Fed.

Corporate News

Akamai Technologies shares surged more than 20% after the company signed a seven-year, $11.6 billion computing contract with Anthropic, adding to a growing list of data-center agreements.

Shares of Select Water Solutions rose 6.6% after the company announced the acquisition of Pilot Water Solutions, which owns infrastructure used to manage water produced in oil and gas operations.

The parent companies of Brightline, operator of the private passenger rail service between Miami and Orlando, filed for Chapter 11 bankruptcy protection to restructure their heavy debt load. The agreement includes $490 million in new financing, while rail service will continue operating as usual.

The “To-Do List”

  • Follow developments around the potential phased agreement between the U.S. and Iran over the Strait of Hormuz, and its impact on Brent heading into the weekend.

  • Watch for any further developments regarding a potential temporary ban on diesel exports being considered by Trump’s economic advisers.

  • Today’s routine: complete 3 rounds of 12 push-ups, 20 mountain climbers, 15 bicycle crunches per side and a 30-second plank. Rest 20 seconds between exercises and 30 seconds between rounds. Approximate duration: 8 minutes.

  • Remember that today marks another anniversary of the 1995 broadcast in Mexico of the final episode of El Chavo del 8, closing an era of Mexican television that shaped generations.

Today’s Recommendation…

This weekend, check out El Parnita at Av. Yucatán 84, Roma Norte, Mexico City. It is a contemporary neighborhood eatery serving home-style Mexican food, with excellent antojitos, tacos, tortas and tlacoyos in a relaxed setting full of personality. It has remained one of the area’s favorites for more than a decade, with an accessible, authentic and unpretentious concept.