MEXICO: Deputy Governor Heath Admits Banxico CPI Forecast Naïve
Sep-03 15:41
- Speaking at an event hosted by the Bolsa Institucional de Valores, Banxico Deputy Governor Jonathan Heath has admitted that the central bank has “almost a naive forecast” for inflation. Heath was highlighting the bank’s projections for non-core inflation and said the component has traditionally been more volatile.
- If there is a “very clear downward trend in inflation”, then there is room to keep lowering interest rates through year end, according to Heath. However, Heath acknowledges that if the bank’s forecast is incorrect, “then you don’t have that room or maybe you should just wait and see whether we have it or not, depending on how the information turns out.”
- It is worth noting that these views are not necessarily a surprise, as Heath has clearly been the most hawkish member of the Banxico committee, continuing to dissent at meetings in favour of keeping the benchmark rate unchanged. The next committee meeting/decision is scheduled for September 25, where the dovish majority are expected to vote for a further 25bp rate reduction to 7.5%.
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EUROPEAN FISCAL: MNI Analysis: 2026 German Budget
Aug-04 15:39
- Finance minister Klingbeil last week presented the 2026 budget briefly after it was agreed on internally by the government and gave an update on the federal financial plan through 2029.
- The key takeaway from the announcement is that the government will face a significant task of consolidating its budgets starting 2027 and has limited plans yet on how to do so. Also on proclaimed structural reforms (bureaucracy reduction, social security reform), details are scant.
- Defense expenditure plans are largely unchanged vs previous, with the NATO quota to increase to 2.6% in 2026 and 3.5% in 2029 (excluding military-related infrastructure investment), while infrastructure investment from its related special fund is to focus on transport and digitization – with planned volumes to pick up next year and then remaining roughly stable through to 2029.
- Against that context, also note the recent MNI policy exclusive suggesting caution around the announced infrastructure figures.
FED: US TSY 26W BILL AUCTION: HIGH 3.980%(ALLOT 98.27%)
Aug-04 15:32
- US TSY 26W BILL AUCTION: HIGH 3.980%(ALLOT 98.27%)
- US TSY 26W BILL AUCTION: DEALERS TAKE 16.27% OF COMPETITIVES
- US TSY 26W BILL AUCTION: DIRECTS TAKE 9.10% OF COMPETITIVES
- US TSY 26W BILL AUCTION: INDIRECTS TAKE 74.62% OF COMPETITIVES
- US TSY 26W BILL AUCTION: BID/CVR 3.14
FED: US TSY 13W BILL AUCTION: HIGH 4.165%(ALLOT 28.41%)
Aug-04 15:32
- US TSY 13W BILL AUCTION: HIGH 4.165%(ALLOT 28.41%)
- US TSY 13W BILL AUCTION: DEALERS TAKE 23.74% OF COMPETITIVES
- US TSY 13W BILL AUCTION: DIRECTS TAKE 7.19% OF COMPETITIVES
- US TSY 13W BILL AUCTION: INDIRECTS TAKE 69.07% OF COMPETITIVES
- US TSY 13W BILL AUCTION: BID/CVR 3.17
