MEXICO: Banxico Governor Says Inflation Lower Than Historical Averages

• BOC SAYS FIRMS, CONSUMERS SEE HIGHER ODDS OF CANADA RECESSION
• BOC: FIRMS SEE BIGGER PRESSURE ON CPI THAN GROWTH FROM TARIFFS
• BOC: FIRMS DELAYED HIRING, INVESTMENT IN Q1 ON TARIFF THREAT

• BOC survey showed firms see inflationary pressures outweighing pressure from weak demand amid US tariff concerns. 
• BOC survey showed 67% of consumers expect a recession over the next year, up from 47% in Q4 while 32% of firms also expect a recession over the same period from 15% in last two quarters. Companies put hiring and investment plans on hold amid the uncertain economic outlook with Q1 sales growth balance of opinion +13 vs +31 in Q4.  
• BOC said consumers expect little change in interest rates in the coming year. That's compared to last quarter's results where consumers anticipated further cuts. Consumer sentiment turned more cautious from Q4's stronger spending plans amid economic uncertainty and rising costs. 
• Business inflation expectations rise with 23% seeing inflation above 3% over the next two years, up from 20% in Q4 while 44% expect inflation between 2% and 3%.  

Markets undergo a sharp bout of volatility as an unverified headline doing the rounds on social media that insinuated that White House Advisor Hassett had said that "Trump is considering a 90-day pause in tariffs for all countries except China". We note that the headline was not reported on any reputable newswire, and as such was unverified. Nonetheless, risk rallied sharply, with the e-mini S&P spiking to 5286.50 and the US 10y yield being marked higher to 4.20%.

• This newsflow was swiftly denied, however, prompting markets to reverse the entirety of the move, putting stocks back at pre-announced levels and the US 10y yield back below 4.10%.