Last week, Banco de México cut the reference rate by 50bp in line with expectations. The decision was not unanimous as Jonathan Heath voted for a pause.
The forward guidance mentioned that the Board could continue calibrating its monetary policy stance but removed the reference “consider adjusting it by a similar magnitude” from the statement.
In our view, with a less dovish Banxico, MBonos should more clearly outperform TIIEs; thus, we maintain our preference for the former (M28 - M31). A less dovish Banxico provides an anchor for the MXN as the USD weakens, even though the factors justifying a depreciation in 4Q25 remain.
This week in the US, market attention will be on the labour report. Overall, the latest US labour reports some resilience over the past few months, despite forecasts of slower economic activity.
Overall, the FOMC is expected to maintain a “wait and see” approach in the short term, though rate cuts remain on the table for the second half of 2025.
Adding to the global economic outlook, Mexico is set to release several key indicators this week, such as remittances figures for May 2025 and June IMEF indicators.
Looking ahead, we maintain our view that the balance of risks to Mexican economic activity remains tilted to the downside. Persistent trade and geopolitical uncertainties will likely weigh on the outlook, particularly as the USMCA revision process approaches in the third quarter of 2025.