Daily Brief | May 29 2025

Top News

·     A federal court may overturn various Trump-era tariffs.

·     Later today, the minutes from Banco de México’s monetary policy meeting will be released.

·     According to the second of three estimates, U.S. GDP for Q1 2025 declined by -0.2% on a seasonally adjusted annualized quarterly rate. The first estimate had shown a -0.3% drop.

·     Initial jobless claims came in at 240,000, above the market consensus estimate of 230,000 and up from 226,000 the previous week.

·     Demand for 40-year Japanese bonds plummeted amid concerns about fiscal sustainability and the country’s high debt levels.

·     The European Central Bank is expected to cut its deposit rate to 2.0% on June 5, according to a Reuters poll. 

Economic Outlook

A federal court may overturn various Trump tariffs. A U.S. trade court ruled that former President Donald Trump did not have the legal authority to impose tariffs on nearly all countries. The ruling, issued Wednesday by the U.S. Court of International Trade, struck down tariffs imposed under the International Emergency Economic Powers Act. It’s worth noting that tariffs tied to fentanyl and migration — 20% on China and 25% on Mexico and Canada for products outside USMCA — as well as the reciprocal tariffs announced on Liberation Day (currently at 10%), should be nullified by this decision. However, other tariffs on autos and auto parts, steel, aluminum, and their derivatives (at 25%) would remain in place, as these were based on Department of Commerce investigations. While the government can still appeal the ruling and resolution timelines are unknown, we see this as a positive development. If implemented, the automotive sector in Mexico could benefit due to two comparative advantages: 1) tariffs only apply to non-U.S. content, and Mexican industry estimates this at around 40%, and 2) USMCA-compliant auto parts are exempt from tariffs.

Markets and Stocks

In the U.S., futures for major stock indices were higher following the trade court ruling that nullified President Trump’s proposed reciprocal tariffs. The decision eased market concerns that had been stirred by trade policy uncertainty. European markets were also trading higher. Meanwhile, in Asia, indices closed in positive territory.

In the commodities market, oil prices edged slightly lower amid uncertainty regarding U.S. sanctions on Russian crude and the possibility that OPEC+ may increase production in July. Gold was up 0.9%, although the easing of trade tensions weighed on its safe-haven appeal.

In fixed income, U.S. Treasury yields held steady. The 10-year yield stood at 4.46%, while the 2-year yield was at 3.97%.

In Mexico, IPC futures were up +0.5%, and the exchange rate stood at 19.32 pesos per dollar, compared to 19.41 in the previous session.

Corporate News

à Nvidia exceeded expectations in both revenue and earnings. Strong performance in its data center business — which grew 73% YoY — was key to the results. The company noted that its sales could have been $8 billion higher were it not for export restrictions on its H20 chips to China.

à Best Buy cut its sales and earnings forecast for fiscal year 2026, citing the impact of tariffs on imported electronics, which have increased its costs and squeezed margins.

à Salesforce reported strong results for the first quarter and raised its full-year outlook. Revenue grew by 7.6%, and its recent $8 billion acquisition of Informatica was well received.