The Day at a Glance | May 14 2025

The Central Bank of Mexico will cut its policy rate by 50 basis points next Thursday, May 15^th.

• On Wednesday, U.S. President Donald Trump met with the president of Syria and urged him to normalize relations with Israel, following the surprise announcement that Washington would lift all sanctions imposed on the Islamist-led Syrian government.

• Federal Reserve Vice Chair Philip Jefferson said on Wednesday that although recent inflation data shows continued progress toward the 2% target, the outlook has become uncertain due to the possibility that new import tariffs could drive prices higher.

• According to Reuters, ECB supervisors are asking some banks in the region to assess their need for U.S. dollars in stress scenarios, considering situations in which they may not be able to rely on Fed support under the Trump administration.

• Wholesale inflation in Japan reached 4.0% in April, as companies continued to pass on higher costs of raw materials and labor, highlighting price pressures and likely keeping the central bank on track to continue raising interest rates.

• Oil prices fell on Wednesday as traders anticipated a possible build in U.S. crude inventories, while OPEC lowered its forecast for supply growth from non-OPEC+ producers.

Economic Environment

The Central Bank of Mexico will cut its funding rate by 50 basis points next Thursday, May 15^th. Tomorrow, the Bank of Mexico will release its monetary policy announcement, in which we estimate a 50-basis-point cut to bring the funding rate to 8.50%. Additionally, we expect the decision to be unanimous. Possibly more important than the decision itself will be the forward guidance and the Governing Board´s tone, as there is significant uncertainty in the market regarding upcoming rate decisions. In our view, there are several factors that could slow the pace of future cuts. For example: 1) the Federal Reserve has indicated it’s in no rush to lower interest rates, 2) the benchmark rate differential between Mexico and the U.S. stands at 450 bps (the historical average spread between 2008 and 2019), and tomorrow’s decision would bring it down to 400 bps, and 3) we believe inflation is unlikely to decline much further this year. For now, we estimate that the policy rate will close the year at 8%, considering the previously mentioned factors. 

Markets and Companies

U.S. equity indexes are logging mixed figures this morning, as Wall Street looks to extend the strong start to the week that pushed the S&P 500 into positive territory for the year.

In Europe, stocks are also trading mixed. The Stoxx 600 is trending lower, threatening to break a four-session winning streak.

Meanwhile in Asia, markets closed with mixed figures as investors assessed the progress of U.S.-China trade negotiations.

In commodities, crude prices stood out on Tuesday with a roughly 3% gain, backed by the temporary tariff cuts between the U.S. and China, as well as better-than-expected inflation data.

In contrast, gold prices are falling as easing trade tensions have calmed fears of a potential global recession, boosting investor appetite for risk and weakening gold’s safe-haven appeal.

In Mexico, the IPC is down 0.19%, while the exchange rate stands at 19.33 after closing at 19.41 yesterday.

Corporate News

• Shares of American Eagle Outfitters fell 11% in early trading. On Tuesday, the company withdrew its 2025 guidance due to macroeconomic uncertainty. Facing weak sales and aggressive discounting, the company also recorded $75 million in write-offs related to spring and summer merchandise.

• Shares of Super Micro Computer rose about 15%, extending the 16% rally seen on Tuesday. This week, Raymond James initiated coverage on the stock with an “outperform” rating, following the company’s quarterly earnings release last week.