MEXICO: Additional Analyst Views On Banxico Minutes
Jul-11 15:34
- Goldman Sachs says that the balance of views within the MPC remains dovish though more cautious. In their assessment, the majority of directors downplayed the recent acceleration of inflation and the recurrent upward revision to inflation forecasts, choosing instead to focus on what they judge as favourable medium-term determinants of inflation. In August, Banxico will likely revise inflation forecasts up again and downshift the easing pace to 25bp. Given their baseline for three FOMC 25bp Fed funds cuts this year, GS expects the policy rate in Mexico to reach 7.25% by end-2025.
- BBVA says that the minutes show a slower pace of easing is warranted going forward, meaning that the swift adjustment towards a less restrictive stance has ended. They expect Banxico to cut rates by 25bp in the coming meetings as inflation is at a turning point and economic activity continues to show signs of weakness, bringing the policy rate to 7.0% by year-end. For the MXN, the fundamentals still support a cautious view. BBVA believes there is limited room for further upside and expect renewed MXN weakness if global sentiment shifts or the dollar rebounds.
- Based on members’ comments, Scotiabank anticipates a 25bp cut to 7.75% in August, though with a split vote. After that they only see one further 25bp cut to 7.50% later in the year, due to the deteriorating inflation risk balance, ongoing uncertainty, and the Federal Reserve’s restrictive stance.
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OPTIONS: Larger FX Option Pipeline
Jun-11 15:34
- EUR/USD: Jun13 $1.1400-05(E1.7bln), $1.1485-00(E2.0bln); Jun16 $1.1400(E1.3bln), $1.1450-65(E1.5bln), $1.1500(E1.5bln)
- USD/JPY: Jun13 Y144.00($1.2bln); Jun16 Y145.00($4.4bln)
FED: US TSY 17W BILL AUCTION: HIGH 4.220%(ALLOT 22.92%)
Jun-11 15:32
- US TSY 17W BILL AUCTION: HIGH 4.220%(ALLOT 22.92%)
- US TSY 17W BILL AUCTION: DEALERS TAKE 32.60% OF COMPETITIVES
- US TSY 17W BILL AUCTION: DIRECTS TAKE 5.12% OF COMPETITIVES
- US TSY 17W BILL AUCTION: INDIRECTS TAKE 62.28% OF COMPETITIVES
- US TSY 17W BILL AUCTION: BID/CVR 2.96
TARIFFS: Lutnick Says China Won't Get "Our Best Chips"
Jun-11 15:21
Reuters carrying comments from US Commerce Secretary Howard Lutnick, speaking to CNBC on the US-China trade framework struck after two days of talks in London.
- Lutnick notes that US President Donald Trump and Chinese President Xi Jinping have to “approve final wording” of the deal. The tone of Trump’s Truth Social post earlier today suggests he is likely to endorse the agreement.
- Lutnick said: “China is going to approve all applications for magnets for US companies,” referring to rare earth components that are critical for a range of high-tech products.
- Lutnick appeared to suggest that the tariff rate agreed in London will be final: “You can say China tariff levels won't change from here.”
- On export controls, which come under the purview of his Commerce Department, Lutnick said the Chinese side “always wants to remove export controls,” but added "We are not going to give China our best chips.”
- Lutnick continued, “They've agreed we are going to examine how China can do more business with us.”
- In his ongoing testimony to the House Ways and Means Committee, Treasury Secretary Scott Bessent noted a short time ago that the Trump administration will continue to take a firm line on China’s industrial overcapacity.
- Speaking more broadly on trade, Lutnick said, “deal after deal” will start coming next week. Bloomberg reports that EU negotiators see trade talks stretching beyond the July 9 deadline, despite an uptick in talks.
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