In line with expectations, the Bank of Mexico kept its overnight rate unchanged at 6.50%. The decision was unanimous. Regarding forward guidance, the statement indicated that the current rate level is consistent with the inflation convergence trajectory, without committing to additional movements in the short term. On inflation, minor adjustments were made to forecasts for coming quarters, but the expectation of achieving convergence to the 3.0% target in the second quarter of 2027 was maintained.

Our Take

Banxico follows the script by keeping the cost of money unchanged and reiterating that for an extended period the current interest rate is the appropriate one to bring inflation to the 3.0% target. However, relevant pending matters remain ahead, particularly how to ensure that core inflation, especially services inflation, begins to ease more forcefully, and watching the relative monetary stance with the Fed, especially if the US authority eventually raises rates.

Tokyo's consumer inflation rose from a four-year low in June, with core inflation also rising amid higher energy prices from the Middle East conflict. The core component, which excludes the volatile prices of fresh food, increased 1.6% annually in June, in line with expectations and accelerating from 1.3% the prior month. Meanwhile, headline inflation grew 1.7% annually, rising from the previous month's 1.4%. Tokyo inflation typically functions as a leading indicator of national inflation data, which will be published later in July.

Our Take

With these figures, the market continues to price in an additional 25 basis point interest rate hike by the Bank of Japan by year-end. In fact, the minutes of the June meeting revealed that some board members expressed a more restrictive stance in the face of rising inflationary risks.

According to the European Central Bank's Consumer Expectations Survey, median consumer inflation expectations for the next 12 months fell to 3.5% in May, their lowest level in three months, from 4.0% recorded in each of the prior two months, which had been the highest reading since 2023. Longer-term inflation expectations remained stable at 2.9% for a three-year horizon and 2.4% for a five-year horizon.

Our Take

Uncertainty around 12-month inflation expectations declined, though it remained elevated compared to levels observed before the outbreak of the Middle East conflict. The ECB closely monitors these expectations because they influence household consumption, saving, and investment decisions and constitute a relevant indicator for the assessment of price stability prospects.

Oil seems immune to the latest tensions that have occurred in the Middle East. Crude prices fall around 2.5% this Friday, despite the US and Iran having been involved in a new clash following an attack on a vessel transiting the Strait of Hormuz. Iran allegedly fired on Thursday against a Singapore-flagged cargo ship in the Strait of Hormuz without causing casualties.

Our Take

This has done nothing but reignite tensions and put back in focus the fragility of the agreement reached between the US and Iran, which have given themselves 60 days to reach a definitive peace agreement that ends the Middle East conflict. However, oil has continued to fall, as investors appear more focused on supply prospects, which have increased with the recovery of traffic through this maritime corridor.

Corporate News

A New York Times report indicated that OpenAI could postpone its stock market listing plans until 2027, which triggered a decline of more than 8% in SoftBank Group, one of the company's main shareholders, and dragged the Nikkei 225 to a loss of 4.2% in Friday's session. Investors withdrew money from US stocks for the first time in three months this week, with record outflows specifically from the technology sector, according to Bank of America data.

Our Take

The potential IPO delay has two readings. The first is negative for SoftBank and for private equity funds with positions in the company, as a delay of six months or more in implicit liquidity postpones the distribution of returns to partners. The second reading, however, could be constructive for the market in general: if OpenAI decides that current market conditions are not ideal for its debut, that decision preserves institutional capital that would otherwise have been allocated to OpenAI's shares and can be redirected to already-listed assets.

Volkswagen is evaluating doubling its job cuts to up to 100,000 workers and closing four plants in Germany in what would be the largest restructuring in the company's 89-year history, according to a Manager Magazin report. CEO Oliver Blume is seeking to make the group more competitive against fierce Chinese competition in Europe and weak domestic demand. Last week, at VW's annual meeting, Blume presented plans to eliminate 50,000 jobs in Germany by 2030 with up to 19,000 cuts this year; the new report suggests that number could double.

Boeing secured a China Southern Airlines order valued at US$3.62 billion, marking an important return of the manufacturer to the Chinese commercial aviation market. The order coincides with broader signals of de-escalation in the US-China trade relationship, including last fall's tariff truce and ongoing talks about a long-term framework.

The to-do list

  • Monitor oil throughout the day: Iran attacked a Singapore-flagged cargo ship in the Strait of Hormuz, but crude continues falling toward $73 because the market is more focused on the recovery of supply than on the incident, a signal that the conflict narrative is losing its grip on prices.

  • Follow the technology sector's reaction: the potential postponement of OpenAI's IPO until 2027 triggered declines in SoftBank and the Nikkei, and investors withdrew money from technology stocks for the first time in three months, setting the tone for the week's close.

  • It's Friday, close the week without pending matters: have everything ready before 3pm and enter the weekend with a clear slate. There are several World Cup matches to enjoy this afternoon.

  • This weekend, prepare some cecina with nopales and charros beans, a weekend classic that deserves time and a shared table.

  • Dedicate 30 minutes to a dance class at home, put on music and move; body and spirit appreciate it at the end of such a loaded week.

Today's recommendation…

The Analyst by John Katzenbach — a novel that hooks you from the first page. A psychological thriller perfect for a World Cup weekend where you also want to disconnect with a good read.