MEXICO: Banxico's Heath Flags Additional Upside Risks To Inflation
Oct-09 15:08
- After his dissenting vote to remain on hold, the Banxico minutes highlight Deputy Governor Heath’s concerns about further upside risks to inflation, which he feels have not been considered by the committee and require that they proceed with caution:
- “Along with the persistence of the non-core component, the balance of risks for inflation faces an additional challenge. Our forecasts anticipate atypically low levels of non-core inflation below 3% that prevail throughout eight quarters of the forecast horizon, and which do not contemplate the typical variance that usually accompanies this index. This component has never remained under this level for an extended period, and thus, in the absence of a structural change that would justify said dynamic, the fact that this prevision has not materialized is an evident upward risk that has not been considered.”
- "Moreover, there are two other elements in the balance of risks that are excluded from the list. First, the increase in taxes on soft drinks and cigarettes announced for 2026. Second, the imposition of tariffs on imports from countries without a trade treaty with Mexico, particularly imports from China, which are used as significant inputs for diverse products. Both upward risks have been highlighted by analysts of a number of financial institutions, along with estimates of their likely impact, which are far from negligible. I call once again to proceed with caution."
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US TSYS: Extending Lows
Sep-09 15:07
- Treasuries are extending lows at the moment, no particular headline or Block driver as many ply the sidelines ahead of CPI/PPI data next two sessions.
- Currently, the Dec'25 10Y trades -10 at 113-07.5 (yld 4.0856 +.0458) -- Initial firm support to watch is 112-11+, the 20-day EMA.
- Curves bear flattening: 2s10s -0.971 at 54.171, 5s30s -0.249 at 112.703.
- US$ gaining, BBG index BBDXY currently +1.51 at 1200.06 vs. 1196.69 post data low.
NORWAY: Preview: August Inflation Due At 0700BST/0800CET Tomorrow
Sep-09 15:01
Norwegian August inflation is due tomorrow at 0700BST/0800CET. Together with Thursday’s Q3 Regional Network Report, the data will be key in determining whether Norges Bank can deliver another 25bp cut on September 18.
- At its June and August decisions, Norges Bank Governor Wolden Bache said that the June MPR rate path was consistent with “one or two” more rate cuts this year (with implied probabilities skewed towards the quarterly MPR meetings in September and December). These comments keep the door open to a rate hold in September if this week’s data surprise in a hawkish direction – a risk markets may be underappreciating at present.
- Norges Bank’s June MPR projections for CPI-ATE are on track after two consecutive 3.1% Y/Y prints in June and July. In August, there are downside risks to the 3.1% Y/Y Norges forecast due to a reduction in child daycare prices in the 2025 Revised National Budget. From Norges Bank’s August monetary policy assessment: “Child daycare prices were reduced from 1 August 2025 and will thus be lower than assumed in the June Report. The reduction in child daycare prices will lead to lower 12-month inflation in the coming year and a modest improvement in household purchasing power but will probably have little impact on inflation further out”. That suggests Norges Bank are happy to look through the temporary policy change.
- The median analyst expects CPI-ATE inflation at 2.9% Y/Y in August, with forecasts ranging from 2.8-3.1%. A 3.1% Y/Y reading probably isn’t enough to derail a September cut just yet, but any higher and we think doubts should be increased - particularly if the Regional Network Survey is also hawkish.
- Alongside the daycare price impact, analyst previews we have seen generally expect a softening in food and rent inflation in August.
- Headline inflation is seen accelerating on an electricity base effect to 3.5% Y/Y (vs 3.3% prior), in line with Norges Bank projections.
MNI EXCLUSIVE: Senior European Commission energy analyst gives his view
Sep-09 14:56
Senior European Commission energy analyst gives his view on medium-term energy market trends.-- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
