20260928 2

Iran offered to restore transit through the Strait of Hormuz within seven days if the U.S. lifted the naval blockade on its ports, eased oil sanctions and released frozen funds. President Trump rejected those terms, although he left the door open to further talks.

Our Take

The rejection delays a potential resolution that would allow oil flows to normalize. Without an agreement, energy prices are likely to remain exposed to bouts of volatility, adding inflation risks and leaving central banks with less room to ease monetary policy.

20260928 3

Crude exports from the leading Middle Eastern producers rebounded in September to 12.8 million barrels per day (mbd), their highest level since the war between the U.S. and Iran began in February. The increase was driven primarily by higher shipments from Saudi Arabia and the United Arab Emirates, as well as a recovery in flows through the Strait of Hormuz.

Our Take

Despite the rebound, combined exports from Saudi Arabia, the UAE, Iraq, Oman, Qatar, Kuwait and Iran remain roughly 6 mbd below the 18.8 mbd recorded in February. The figures, however, may also understate actual flows because they exclude vessels that switch off their tracking systems.

China and the U.S. have agreed to reduce tariffs on roughly $60 billion worth of imported goods under agreements reached during the recent summit between Donald Trump and Xi Jinping in Washington. Each country has proposed a list of non-sensitive goods worth around $30 billion that would receive more favorable tariff treatment. The reciprocal tariff reductions come on top of an extension of the trade truce between the two powers and represent another step toward stabilizing bilateral trade relations.

Our Take

The agreement reduces some trade uncertainty and, if implemented, could lower costs for businesses and consumers. Its impact on headline inflation would likely be limited given the scope of the goods included. For Mexico, it will be important to monitor both the implementation of the cuts and their potential impact on sourcing decisions across North America.

The data due this week could reinforce expectations for another Fed rate hike at its late-October meeting. Real consumption is expected to post a strong gain in August, core PCE inflation is seen rising 0.3% month over month, and the U.S. economy is expected to have added roughly 90,000 jobs in September. At the end of last week, futures were pricing in roughly a 65% probability of an October hike.

Our Take

If those forecasts are confirmed, it would become more difficult for the Fed to attribute inflation solely to supply shocks, as resilient spending would also point to demand-side pressures. Another rate increase could push bond yields higher and strengthen the dollar.

Corporate News

Citigroup is preparing the initial public offering of Banamex alongside Bank of America, Goldman Sachs and JPMorgan Chase, with the transaction expected to raise more than $3 billion. The listing is being considered for January 2027 and would allow Citi to reduce its roughly 51% remaining stake, although the final terms have yet to be determined.

Nvidia unveiled the Open Agent Safety Platform, a dual-layer security framework for artificial intelligence agents that, according to the company, would have prevented the Hugging Face breach in July involving OpenAI models.

Australian gold miner Northern Star rejected a $27.1 billion takeover offer from South African rival Gold Fields. The board unanimously rejected the proposal, arguing that it materially undervalued the company, came at a highly opportunistic time and was subject to several conditions. The board also raised concerns that nearly all of the consideration would be paid in Gold Fields shares.

McDonald’s shares have fallen 31% from their February record high, putting them on track for their worst annual decline since 2002, after sales were hit by diners who believe the chain’s menu has become too expensive.

The To-Do List

  • Track the spread between 10-year and 2-year Treasury yields, as the curve is close to becoming fully inverted.

  • Watch for any updates on Grupo Financiero Banamex’s IPO process and its potential impact on the Mexican Stock Exchange.

  • Complete 3 rounds today of 40 seconds of fast lateral steps, 12 bottle rows per arm and 20 short crunches. Rest 20 seconds between exercises and 30 seconds between rounds. Approximate duration: 8 minutes.

  • Remember that today marks 205 years since the signing of the Declaration of Independence of the Mexican Empire in 1821, the document that formally established Mexico’s separation from Spanish rule following the entry of the Army of the Three Guarantees into Mexico City.

Quote of the Day…

“Historically, [an inversion of the yield curve] has been quite a good signal of recession... but I would emphasize that on this occasion it may be a less reliable signal.” ...Janet Yellen, former Fed Chair.