Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MNI BANXICO PREVIEW - Wait And See
The full preview with analyst views can be found here:
MNI Banxico Preview May 2021.pdf
Banxico's governing board are likely to leave the policy rate unchanged at 4% in a unanimous decision, awaiting further evidence of whether the price pressures prove transitory and if metrics are likely to converge to target. Of more importance will be the quarterly report on June 2nd, at which Banxico may upgrade their 2021 growth forecasts, lessening the need for further stimulus at this stage.
Markets on surer footing
Financial conditions improved since the March meeting. USDMXN is roughly 4% lower, 10-year TIIE swap rates are roughly 5 basis points lower and 5-year CDS spreads narrowed by around 16 basis points to 95bp. However, caution is warranted, especially given the ongoing steepening of the term structure of rates. 10-year TIIE swap rates remain around 150 basis points higher on the year and there has been a consistent decline of overseas ownership of local Mbonos. Governor Díaz de León has assured that this process has been orderly, while highlighting its contribution to prudent policy making.
Headline Inflation Ahead of Expectations
April inflation rose faster than forecast to 6.08% y/y. The core reading was also above the target range at 4.13% y/y. While neither were a significant surprise, the persistence of the upward pressure supports anxieties relating to the price outlook. Short-term inflation expectations have accelerated, with Banxico's most recent survey moving from 4.1% to 4.6% for 2021 year-end inflation and from 3.6% to 3.7% for the core reading.
MNI/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.