Highlights Mexico has been experiencing stagflation: core inflation has risen sharply while the level of domestic demand in real terms is well below its pre-pandemic level. Going forward, tight fiscal and monetary policies will put a…
The Bank of Mexico raised rates by 25 bps on Thursday, marking the fourth consecutive rate increase this year and bringing the benchmark rate to 5%. These hikes come as the central bank attempts to temper rising inflation. At 6.…
Highlights The US Climate Prediction Center gives ~ 70% odds another La Niña will form in the August – October interval and will continue through winter 2021-22. This will be a second-year La Niña if it forms, and…
Highlights The dollar is fighting a tug of war between two diverging forces: an economic slowdown around the world but plunging real interest rates in the US. The litmus test for determining which force will gain the upper hand is if…
Highlights Geopolitical risk is trickling back into financial markets. China’s fiscal-and-credit impulse collapsed again. The Global Economic Policy Uncertainty Index is ticking back up after the sharp drop from 2020. All of our…
Mexico’s midterm elections yielded a positive outcome for Mexican assets over the weekend. Preliminary estimates by the National Electoral Institute indicate that left-wing President Andres Manuel Lopez Obrador’s (…
Highlights Biden’s first 100 days are characterized by a liberal spend-and-tax agenda unseen since the 1960s. It is not a “bait and switch,” however. Voters do not care about deficits and debt. At least not for now.…
In the second half of the year, global growth will be bifurcated. On one hand, monetary and fiscal stimulus in the US, and to a lesser extent Europe, will remain ultra-accommodative and will support their economic recoveries. On…
The Mexican economy was hit by a perfect storm in the last few years. But the stars are now beginning to align. The country’s growth headwinds – sluggish productivity, lack of investment, tight fiscal and monetary…
Highlights The prevalence of oligopolies and monopolies in a number of industries as well as lack of investment in hard and soft infrastructure have been the underlying cause of sluggish productivity growth in Mexico. This has weighed…