- US labor market remains resilient, with May payrolls increasing by more than 170k jobs, broad-based employment gains, and a stable 4.3% unemployment rate, supporting the view that the Fed can keep rates unchanged while focusing on inflation developments.
- US Treasury yields moved higher as stronger labor data reduced expectations of near-term Fed easing. Markets are now pricing a more hawkish path, with attention turning to May CPI data and whether core goods inflation shows renewed pressure.
- Mexican rates followed the US selloff, with the MBono curve rising around 8bp. Upcoming May inflation data are expected to show continued disinflation, potentially pushing headline inflation below 4% YoY, while Banxico is expected to keep the policy rate at 6.5% for an extended period.
- Economic activity remains soft in Mexico, making upcoming industrial production data important for assessing whether the manufacturing sector is beginning to recover after contracting in 1Q26.
- We maintain a cautious medium-term view on Mexican assets, expecting the MXN to remain range-bound in the near term but gradually weaken toward 17.80/USD in 2H26 and continue to favor local fixed income over equities given the current risk-reward profile.