Daily Brief | June 27 2025

Top News

·     The Bank of Mexico cut its benchmark rate and signaled it may slow the pace of future rate cuts.

·     In the U.S., weak consumption data was reported while PCE inflation rose in May.

·     President Donald Trump announced on Wednesday the signing of a trade agreement with China, setting U.S. tariffs at 55% and Chinese tariffs at 10% on U.S. goods entering China. He also stated that a deal with India will be announced soon.

·     Later today, the University of Michigan’s consumer sentiment index will be released, with market consensus expecting it to hold at 60.5 in June, matching the preliminary reading. 

Economic Outlook

The Bank of Mexico cut its benchmark interest rate and signaled it may slow the pace of future rate cuts. The central bank lowered the funding rate by 50 basis points to 8.00%, in a move widely expected by market consensus. Notably, the decision was not unanimous—Board member Jonathan Heath voted to keep the rate at 8.50%. The central bank introduced key changes in its statement worth highlighting: 1) it added the exchange rate, economic activity weakness, and shifts in global trade policies as variables to closely monitor; and 2) it avoided explicitly referring to the size of future rate cuts, which could be interpreted as a signal that the pace of monetary easing may slow or even pause if inflationary pressures persist. This omission contrasts with previous statements that included the possibility of adjustments “of similar magnitude.” In our view, the tone of the statement suggests that rate cuts will continue, though at a slower pace. Should inflation continue to rise, a pause in the easing cycle cannot be ruled out.

In the U.S., weak consumption data was reported while PCE inflation rose in May. Personal disposable income declined by -0.6% (previous: 0.8%), while personal consumption expenditures fell -0.1% (previous: 0.2%) in nominal terms during the fifth month of the year. Meanwhile, annual inflation in personal consumption expenditures (PCE)—the Federal Reserve’s preferred inflation gauge—stood at 2.3% in May, slightly above the previous month’s 2.2%. The core index, which excludes energy and food, reached 2.7% in May, also higher than the previous reading of 2.6%. Overall, inflation figures ticked higher, despite favorable CPI and PPI data that had suggested a potential decline in the PCE print. In this context, the results may support Fed Chair Jerome Powell’s message of caution before moving forward with interest rate cuts.

Markets and Stocks

U.S. equity futures are trading higher, with the S&P 500 near its all-time high, driven by renewed optimism over a trade agreement between the U.S. and China. Officials from both countries stated they have reached a framework agreement that includes rare earth exports and a reduction in technology restrictions. The index has rallied more than 20% from its April lows. Investors are also digesting a higher-than-expected reading in core PCE inflation, which rose 2.7% year-over-year in May. In Europe, equity markets were trading higher, while Asian markets closed mixed.

U.S. Treasury yields edged up slightly following the inflation release. The 10-year yield held steady at 4.26%, while the 2-year yield rose nearly 2 basis points to 3.74%.

In commodities, oil prices are rising on Friday, although they are on track for their biggest weekly drop since March 2023, amid limited supply disruptions following the Iran-Israel conflict. In contrast, gold fell over 1%, hitting its lowest level in nearly a month, as geopolitical and trade tensions eased and markets reassessed the U.S. inflation data to gauge the outlook for interest rates.

Televisa made an early full cash repayment of 2.65 billion pesos on a bank loan maturing in 2026, reducing the company’s total debt.

Corporate News

– Nike shares rose after the company reported fiscal Q4 results that exceeded market expectations and indicated it expects a moderation in the decline of sales and earnings going forward. The company stated it has already absorbed the worst financial impact of its restructuring efforts and estimates that tariffs will cost around $1 billion, though it plans to offset this through price increases and supply chain adjustments.

– Core Scientific shares extended their rally, fueled by reports that the company is in talks to be acquired by AI firm CoreWeave, according to The Wall Street Journal.