Daily Brief | July 22 2025

Top News

·     The Mexican economy stagnated in May.

·     In Mexico, retail sales grew in the fifth month of the year.

·     Treasury Secretary Scott Bessent said he will meet with his Chinese counterparts next week and that it is very likely that the tariff truce, which is set to end on August 12, will be extended.

·     The International Monetary Fund stated that prolonged internal imbalances, continued uncertainty regarding fiscal policy, and increased trade tensions could deteriorate the perception of risk worldwide. 

Economic Outlook

The Mexican economy stagnated in May. In Mexico, the Global Economic Activity Indicator (IGAE), a proxy for monthly gross domestic product, showed no change in May 2025, according to seasonally adjusted figures. Looking at the details of the indicators, in the fifth month of the year, the primary sector advanced by 3.6% m/m, the secondary sector grew by 0.6% m/m, and the tertiary sector declined by -0.4%. In its annual variation, the IGAE advanced 0.4% in May 2025, below the IOAE estimate of 1.0%. Overall, the economy continues to show signs of weakness, as services, which account for nearly 60% of GDP, have fallen in two of the first five months of the year and industry remains weak.

In Mexico, retail sales grew in the fifth month of the year. INEGI reported that retail sales increased by 1.8% m/m in May, after falling by -1.4% m/m in April, according to seasonally adjusted figures. Within the May figures, the growth in department stores (13.2% m/m) and clothing (3.7% m/m) stands out, as does the decline in sales of home furnishings and other household goods (-5.5% m/m). In annual terms, sales grew by 2.5% in the fifth month of the year. In general, consumption of goods continues to show resilience, but the economy as a whole remains weak. We remind you that these figures are already included in the IGAE estimate for May.

Markets and Stocks

Stock futures in the United States are trading with little change on Tuesday, following new record highs yesterday for the S&P 500 and Nasdaq. Investors are preparing for an important week in terms of financial reports. So far, 88 companies in the S&P 500 have reported results, with more than 82% exceeding market estimates. In addition to the reports, investors are hoping for greater clarity from companies on issues such as the macroeconomic environment, the impact of tariffs, and investment in artificial intelligence. Alphabet (Google) and Tesla will release their results tomorrow, Wednesday, marking the start of the so-called “magnificent seven” reports. In Europe and Asia, stock markets were trading mixed.

US Treasury bond yields fell marginally as investors prepared for the Fed’s decision next week and closely followed Powell’s speech in Washington today. The 10-year bond fell to 4.36% and the 2-year bond fell to 3.84% (-1 bp). Political noise continues: President Trump has pushed for Powell’s removal, and yesterday, Treasury Secretary Scott Bessent called for a thorough review of the Federal Reserve’s work, questioning its failure to cut rates in an environment of very low inflation.

Oil prices fell for the third consecutive session amid fears that the trade escalation between the United States and the European Union will slow fuel demand growth, while gold and silver posted gains.

Gap reported Q2 2025 results with 49.9% growth in revenue and 31.1% growth in EBITDA, supported by the entry into force of new maximum fares and a solid performance in non-aeronautical revenue. Comprehensive net income fell 22.8% due to foreign currency translation losses, although operating net income showed growth. The EBITDA margin excluding the effects of IFRIC 12 remained virtually stable at 67.1%.

Volaris reported 2Q25 results above estimates, although still with annual contractions. Revenue totaled $693 million (-4.5% y/y) and EBITDAR was $194 million (-25.7% y/y), with a margin of 28% (-8 pp). Noteworthy was a better-than-expected TRASM (7.8 cents) and stability in total CASM. The airline updated its guidance for Q3 2025 with an EBITDAR margin of 32%-33% and reduced its capacity growth estimate for 2025 to 7% (previously 8%-9%), reflecting prolonged engine overhauls and moderation in demand.

Corporate News

– General Motors shares fell despite exceeding sales and profit expectations in the second quarter. The automaker reported adjusted operating profit higher than consensus estimates, although this represents a drop of more than 31% compared to the same period last year.

– Lockheed Martin shares fell after its quarterly revenue fell short of market estimates. The company reported a loss of $1.6 billion attributed to certain defense programs. Management indicated that an ongoing review of legacy projects forced it to reevaluate its financial position.

– Coca-Cola shares are trading lower before the open, despite exceeding consensus expectations for revenue and earnings. The company reaffirmed its full-year organic revenue growth guidance and adjusted its earnings per share forecast to the high end of the previously announced range.