Daily Brief | August 22 2025

Top News

·     In Mexico, headline inflation came in lower than expected during the first half of August.

·     The Mexican economy grew 0.4% in the first half of 2025.

·     Banco de México released its monetary policy minutes, leaving the door open to a rate cut next September, though striking a more cautious tone regarding the path of core inflation.

·     Markets will be closely watching Jerome Powell’s participation in the annual monetary policy symposium in Jackson Hole.

·     In the second quarter of the year, the German economy contracted -0.3% q/q, driven by weaker demand from its main trading partner, the United States, following months of front-loaded purchases to avoid tariffs.

Economic Outlook

In Mexico, headline inflation came in lower than expected during the first half of August. INEGI reported that the National Consumer Price Index registered a variation of -0.02%, well below the market consensus of 0.13% and our own estimate of 0.28%. On an annual basis, headline inflation stood at 3.49% in mid-August. Core inflation—which excludes the most volatile components such as energy, agricultural products, and government tariffs—rose 0.09% in the first half of the month, also below both our estimate (0.16%) and the analyst consensus (0.14%). On an annual basis, core inflation stood at 4.21%, with goods at 3.97% y/y and services at 4.43% y/y. In our view, the decline in both headline and core inflation supports expectations for a rate cut at the next policy meeting in September.

The Mexican economy grew 0.4% in the first half of 2025. In the second quarter, GDP expanded 0.6% q/q, in line with our expectation and according to final seasonally adjusted figures, though slightly below the preliminary estimate of 0.7% q/q. Growth was driven by gains in secondary activities (industry) of 0.7% and tertiary activities (services) of 0.8%, which offset a -2.4% contraction in the primary sector. On an annual seasonally adjusted basis, the economy expanded 1.2% in Q2. As a result, in the first half of 2025, GDP grew 0.4% in original terms. In our view, INEGI’s figures suggest that the Mexican economy appears to have moved past its slowdown phase, as the trends in both secondary and tertiary activities were revised upward.

Markets and Stocks

In the United States, futures for the main equity indices traded in positive territory this morning as investors awaited Jerome Powell’s speech at Jackson Hole, which will be key in shaping the course of monetary policy. The market is currently pricing in a 71% probability of a 25bp cut in September, although views within the Fed remain divided. In Europe, major indices also traded with a positive bias, while in Asia, markets closed higher.

In commodities, oil prices held steady with Brent at $67.75 and WTI at $63.69, on track for their first weekly gain in three weeks. Prices found support in a larger-than-expected drawdown in U.S. inventories, though tensions in Ukraine and weak German data limited optimism. Gold prices, meanwhile, slipped 0.4% to $3,325 per ounce.

In fixed income, the U.S. 10-year Treasury yield stood at 4.31%, while the 2-year yield held at 3.8%, with markets closely awaiting Powell’s message at Jackson Hole.

Corporate News

– Meta signed a $10 billion agreement with Google Cloud to expand computing capacity and accelerate AI development, boosting market sentiment by underscoring the company’s aggressive investment strategy in AI infrastructure.

– Nvidia came under pressure after reports that it asked suppliers to halt production of its H20 chip in China, amid growing signals that Beijing aims to reduce reliance on U.S. semiconductors.

– Cenovus Energy announced the acquisition of MEG Energy for C$7.9 billion, viewed as a strategic move to strengthen production scale and gain a competitive edge over rivals, though at a considerable financial cost.

– Workday posted earnings and revenue above expectations, but guidance remained in line with estimates and it warned of headwinds in government and education segments due to reduced funding; the cautious outlook overshadowed otherwise solid results.