- The minutes of the last Banxico meeting were released last Thursday, which were in line with the statement, maintaining a hawkish bias. We continue to see scope for the start of the easing cycle in 1Q24 due to the risks related to the restrictiveness of the current monetary policy stance.
- Inflation in September rose 0.44% MoM, moderating to 4.45% YoY. Core inflation increased 0.36% MoM, moderating to 5.76% MoM. We expect CPI inflation to end the year at around 4.65% YoY and core inflation at 4.8% YoY.
- Last week we published a note in which we provided the findings related to modelling several different scenarios to assess if stabilising the debt-to-GDP ratio is feasible in the medium term. Our findings showed that in reasonably stable conditions of GDP growth, exchange rate, real interest rates and a zero primary balance, public debt should stabilise or increase at a reasonably slow pace.
- We think that the Mexican nominal and real yield curves have scope to shift to the downside, based on our view that monetary policy will normalise. We expect the MXN to depreciate in mid-2024 towards 19.20, but will respond to risks related to the elections in both the US and Mexico, a lower carry, cyclical deceleration, and a stretched valuation.
Credit
- Pemex (B1/BBB/B+) CEO Says Company’s Debt Down to $106.3B as of September.
- FUNO (Baa2/Nr/BBB-) received approval to initiate the processes for the potential internalisation of its "Real Estate Services Advisor”.
- Fitch Ratings: Mexico’s Action on Concession Tariffs May be Negative for Airports but not that much.