MEXICO: Itaú Maintains Forecast For 50bp June Banxico Rate Cut
May-22 14:29
- Itaú says that today’s H1 May CPI report reinforces their view that the disinflation process has already occurred, and that headline inflation is projected to oscillate around the ceiling of Banxico’s inflation target tolerance range, down from nearly 9% at its peak in 2022.
- Most of the disinflation came from non-core items, while core goods inflation continues to accelerate at the margin, and core services inflation remains sticky in a still tight labour market scenario.
- They still expect CPI inflation to end 2025 at 3.9% y/y. Regarding the policy rate, they maintain their call for a 50bp rate cut in June, down to 8.0%.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EUR: Lagarde Suggests EUR Strength is "Counterintuitive"
Apr-22 14:25
Lagarde seemingly suggesting the euro strength has run beyond fundamentals and is "counterintuitive", however she adds that EUR strength reflects Europe's fundamentals. She last commented on the currency as being stronger due to "resilient market sentiment" on April 17th, back when EUR/USD traded ~1.1375.
- We noted earlier that EUR had traded a record high in trade-weighted terms - and while it's unsurprisingly the most stretched DM currency vs historical ranges, GBP, CHF and SEK (just) see a more elevated REER relative to its five-year average. GBP leads on this alternative approach, sitting 6.2% and 7.5% higher than five- and ten-year averages vs 3.9% and 4.7% for the euro.
EUROZONE DATA: Weakest Consumer Confidence Since November 2023
Apr-22 14:20
Eurozone flash April consumer confidence was -16.7, the lowest since November 2023 and well below the -15.1 consensus and last month’s -14.5. The data was collected between April 1 – April 21, and so accounts for the initial fallout and subsequent changes to the US’ April 2 reciprocal tariff announcement.
- Clearly, the pullback in consumer sentiment presents a downside risk to the ECB’s 1.2% 2025 consumption projection. The June monetary policy decision will be presented alongside a fresh round of macroeconomic projections, compiled by Eurosystem (i.e. national central bank) staff.
- From a business perspective, focus turns to tomorrow’s April flash PMIs.
FRANCE: BBG-Macron Floats Snap Election As Early As Autumn
Apr-22 14:11
Bloomberg reports that President Emmanuel Macron is considering calling a snap legislative election as soon as the autumn of this year, claiming "Macron has consulted figures in his inner circle in recent weeks regarding such a scenario, according to people familiar with the exchanges. The discussions are merely consultative and no decision has been made." The last legislative election took place in July 2024, and delivered a fractured National Assembly that has seen away two prime ministers (Gabriel Attal and Michel Barnier), with the incumbent (Francois Bayrou) existing in an uneasy political ceasefire with parties of the left and right.
- The article claims that Macron's inclination towards a snap vote could be down to a boost in his approval ratings (up 7% on the previous month and close to the levels achieved before last year's election).
- The decision may be taken out of Macron's hands, though. A legislative election cannot take place within one year of the previous vote. Given the Bayrou gov'ts lack of a majority in the Assembly, come the summer, the left-wing New Popular Front alliance and the far-right Rassemblement National (RN, National Rally) could unite to out the Bayrou gov't and force a snap election.
- The little polling conducted to date on a prospective legislative election shows RN remaining the single most popular political force in the first round, with the pro-Macron centrist Ensemble trailing in a distant third place.
