Daily Brief | July 18 2025

Top News

·     The Timely Indicator of Economic Activity (IOAE) anticipates that the economy could grow close to 1.0% in the second quarter of the year.

·     Later today, the preliminary University of Michigan Consumer Sentiment Index for July will be released. The consensus estimate places it at 61.5 points.

·     Japan’s core inflation, which excludes fresh food prices, stood at 3.3% y/y in June, in line with market expectations.

·     The European Union will set a cap on Russian crude oil prices at 15% below market value, according to European diplomats, aiming to improve upon the $60 ceiling the G7 has sought to enforce since December 2022. 

Economic Outlook

The Timely Indicator of Economic Activity (IOAE) anticipates that the economy could grow close to 1.0% in the second quarter of the year. The IOAE, which serves as a nowcast of the IGAE, estimates that in May and June 2025, the Mexican economy expanded by 1.0% y/y and 1.3% y/y, respectively, based on seasonally adjusted figures. By component, industrial production—which includes construction, manufacturing, electricity generation, and mining—declined -0.4% y/y in May, and the IOAE estimates it may fall again by -0.6% y/y in June. On the services side, the IOAE projects growth of 1.6% y/y in May and 2.0% y/y in June. At the margin, this would translate into IGAE monthly increases of 0.3% m/m and 0.2% m/m in the fifth and sixth months of the year, respectively, also on a seasonally adjusted basis. Incorporating IOAE growth estimates into the IGAE suggests that the economy may grow 1.1% in 2Q25 vs. 1Q25, indicating that the Mexican economy has stopped contracting thanks to a recovery in the services sector. However, these figures should be interpreted with caution, as the most volatile component—primary activities—is not included in this estimate.

Markets and Stocks

U.S. equity index futures are trading higher this Friday, after the S&P 500 reached a new all-time high in the previous session. Investors continue to digest a fresh round of corporate earnings reports. If the trend holds, the major indexes are on track to close the week with gains. As of Thursday, the S&P 500 was up 0.6%, the Dow Jones had gained 0.3%, and the Nasdaq was leading with a 1.5% advance.

Market sentiment has been supported by optimism surrounding corporate earnings. This week, companies like PepsiCo and United Airlines posted results above analysts’ expectations, adding to the strong reports from banks such as JPMorgan and Goldman Sachs earlier in the week. Additionally, solid U.S. economic data helped boost equities on Thursday.

In fixed income, Treasury yields retreated on Friday, with the 2-year note at 3.86% and the 10-year at 4.42%.

In the commodities market, oil prices are rising this Friday, driven by a sharper-than-expected decline in U.S. crude inventories. Stockpiles fell by 3.9 million barrels last week. Meanwhile, gold is posting marginal gains and is on track to end the week higher.

In corporate news, Arca Continental’s consolidated revenues rose 8.0% y/y in 2Q25 (in line with the +8.0%e), driven by its price-pack strategy and strong in-store execution. Excluding water jug sales, consolidated volume declined -2.3%, with decreases in Mexico and the U.S. partially offset by a recovery in South America. EBITDA rose 8.1% (vs. +7.5%e), reaching Ps. 13,155 million, with a stable margin of 20.7% y/y. We view the report as having a slightly positive tone.

Corporate News

– Netflix shares are trading lower after the company warned that its operating margin in the second half of 2025 will be lower than in the first half, due to higher amortization of content and increased spending on sales and marketing, driven by a broader slate of productions. Despite this, the company exceeded expectations on both revenue and earnings.

– Shares of 3M are rising after the company reported adjusted earnings of $2.16 per share in the second quarter, beating the market estimate of $2.01. Additionally, 3M raised its full-year sales growth guidance from 0.5% to 2.5%.

– Chevron and Hess shares are advancing after Chevron won a dispute against Exxon Mobil over Hess’s offshore oil assets in Guyana. The ruling clears the way for Chevron to complete its $53 billion acquisition of Hess.