On Thursday, a White House press secretary announced that the United States had signed a trade agreement with China, which was later confirmed by Commerce Secretary Howard Lutnick. On Friday, China’s Ministry of Commerce confirmed that a trade agreement had been reached under which the United States will begin eliminating measures restricting trade with China, while China will also eliminate some export controls, particularly on rare earths.
Howard Lutnick also sent positive signals about agreements with other countries. Yesterday afternoon, he commented that the White House plans to close agreements with 10 of its major trading partners in the next two weeks. It should be noted that July 9 is the deadline for signing trade agreements before the reciprocal tariffs announced on April 4 take effect. The possibility that the deadline for reaching agreements could be postponed has circulated in the media, but this has not been confirmed. In Europe, European Commission President Ursula von der Leyen stated that they are ready to reach an agreement before July 9, but that they are also prepared for the possibility that a satisfactory agreement may not be reached. It should be noted that, if an agreement is not reached, the United States would impose a 50% tariff on imports from the European Union.
Meanwhile, the exchange rate hit a record low this morning at 18.8415 pesos per dollar, following the release of economic indicators in the United States reflecting weak income and consumption, raising speculation that the Federal Reserve could cut interest rates in September.
Meanwhile, in the United States, disposable income showed a nominal monthly decline of 0.42% in May, contrary to market expectations of 0.27% growth, marking the largest drop since September 2021. Real personal income contracted by 0.69% monthly, the largest since January 2022, leading to an annual increase of 1.69%, decelerating from April’s 2.66% figure. Meanwhile, real personal consumption also contracted by 0.28% in the month, below market expectations of a smaller contraction of 0.02%. At an annual rate, real personal consumption grew by 2.15% in May, decelerating from April’s 2.94% figure and marking its smallest annual increase since February 2024.
The decline in consumption in May reflects a deterioration in economic activity in the United States.
The Personal Consumption Price Index (PCE deflator), the Federal Reserve’s preferred measure of inflation, showed a monthly increase of 0.14% in May, slightly above the market expectation of 0.10%. Annualized inflation stood at 2.34%, accelerating slightly from April’s figure (2.20%) and above the market expectation of 2.27%. The core index, meanwhile, stood at 2.68%, accelerating from April’s figure of 2.58% and above the market expectation of 2.59%.
Finally, savings stood out, contracting by 8.76%, the largest drop since December of last year, bringing the savings rate to 4.5%, down from April’s figure of 4.9%.
Meanwhile, the dollar began the session with a 0.04% decline, losing for the fifth consecutive session and accumulating a 1.45% drop in this period. Among the broad basket of major crosses, the most appreciated currencies today are: the Hungarian forint (0.51%), the Brazilian real (0.45%), the South African rand (0.39%), the Swiss franc (0.35%), the Czech koruna (0.35%), and the Polish zloty (0.30%). The most depreciated currencies today are: the Colombian peso (0.90%), the South Korean won (0.44%), the Turkish lira (0.28%), the Russian ruble (0.17%), the Chilean peso (0.14%), and the Japanese yen (0.10%). The euro continues to gain ground, showing a 0.36% appreciation and trading at $1.1743 per euro, reaching a high of $1.1744, a peak previously reached in Thursday’s session. With this, the euro has now seen seven consecutive sessions of appreciation, accumulating a gain of 2.29% in this period. The euro’s strength is supported by the possibility of the Federal Reserve cutting interest rates on September 17 and December 10, for a total of 50 basis points, while the European Central Bank is only speculated to cut by 25 basis points on December 18. Furthermore, the euro is gaining on expectations of a trade agreement between the European Union and the United States being reached in the coming days.
The market is also awaiting information on the US vote on the tax bill known as “The One, Big, Beautiful Bill,” which could take place in the Senate this weekend. It’s worth remembering that Trump has demanded that the bill be passed before July 4th. Yesterday, Trump openly mentioned that, with the passage of this bill, he will fund missing sections of the border wall, impose taxes on remittances sent abroad, and increase deportations to at least one million undocumented immigrants per year. Trump’s outright support for the 3.5% remittance tax makes it unlikely that any changes to reduce or eliminate this tax will be made in the coming days, prior to the bill’s vote.
The stock market is showing widespread global gains due to optimism that the United States could reach trade agreements with at least 10 countries in the coming days. The exceptions are the Hong Kong Hang Seng Index, which fell 0.17% in the Asian session, and the Shanghai CSI 300, which posted a 0.61% loss. This is due to the release of Chinese industrial profits for May, which registered a 9.1% annual drop, a sharp decline after growing 3.0% in April. This is the largest annual drop in industrial profits since October of last year and reflects the impact of the trade war with the United States on industrial activity in China.
Meanwhile, Japan’s Nikkei posted a 1.43% gain, marking four sessions of gains and closing at its highest level since December 27, 2024.
And in Europe, the STOXX 600 posted a 0.75% gain, the German DAX posted a 0.76% advance, the French CAC 40 gained 1.25% on the session, and London’s FTSE 100 advanced 0.46%. In the United States, the Dow Jones Industrial Average posted a 0.43% gain, while the Nasdaq Composite posted a 0.30% gain, reaching a new all-time high of 20,247.45 points. The S&P 500 gained 0.30% on the session, also reaching a new all-time high of 6,158.58 points.
WTI is trading at $65.57 per barrel, up 0.48%, its third consecutive session of gains. This is due to a more positive outlook due to the agreement between China and the United States, which includes the supply of rare earths from China, as well as the elimination of retaliatory non-tariff measures.
Regarding economic indicators, the release of Tokyo’s June inflation rate stood out in Japan, slowing from 3.4% to 3.1% annually, below the market expectation of 3.3%. As the slowdown in inflation reduces speculation about Bank of Japan interest rate increases, the Japanese yen depreciated 0.10% this morning, trading at 144.57 yen per dollar.
In Mexico, the INEGI (National Institute of Statistics and Geography) published the results of the National Survey of Occupation and Employment (ENOE) for May 2025. The survey shows that the Economically Active Population (EAP) increased by 205,000 people, reaching a total of 61.66 million. This increase was due to a growth of 72,000 in the employed population and a growth of 133,000 in the unemployed population. This increase in the unemployed population is equivalent to an increase of 8.52%, which exceeds the 0.33% rate of growth in the EAP.
The fact that the unemployed population has grown at a faster rate than the economically active population (EAP) has led to an increase in the unemployment rate, which, according to seasonally adjusted figures, rose from 2.61% in April to 2.71% in May, reaching its highest level since September 2024.
An increase was also observed in underemployment, which is the situation in which employed people need to work more hours than their current job requires. The underemployment rate increased from 6.90% in April to 7.05% in May.
However, an analysis of unemployment and underemployment indicators in Mexico’s urban areas, where economic activity is concentrated and labor markets are more organized, shows that both rates are declining. The unemployment rate fell from 3.19% in April to 3.14% in May, while the underemployment rate fell from 6.24% in April to 5.55% in May, the latter being the lowest rate since October 2018.
Regarding the Non-Economically Active Population (PNEA), comprised of people who are unemployed and did not seek work during the reference period, the total remained virtually unchanged at 42.06 million (-0.01% monthly). However, this was the result of opposing changes in the two populations comprising it. The available population, those who did not seek work but were willing to work, increased by 586,000 people, while the unavailable population decreased by 590,000. Furthermore, compared to May of last year, the PNEA recorded an increase of 2.01 million people, equivalent to 5.02 percent. This increase is partly due to government social programs.
Meanwhile, informal employment, which measures the percentage of the employed population whose employment relationship is not recognized by their employer, stood at 54.76% in May 2025, increasing compared to the 54.65% rate recorded the previous month and also higher than the 54.32% recorded in May 2024. It is important to emphasize that informality is one of the main problems in the Mexican labor market, since, although there may be high job creation, these jobs are not of the highest quality and represent a vulnerability for households.
In terms of relevant news, today in the Mexican Senate, discussion on the reform to the Telecommunications and Broadcasting Law is scheduled to begin at 12:00 pm. This reform proposal has caused controversy, as it seeks to:
- Allow the government to track phone users and access sensitive information such as messages and purchase history.
- Allow the purchase of cell phone chips only upon presentation of official identification.
In addition, this reform also seeks to prohibit the promotion of foreign government policies, with the exception of tourism and sports, and to make the government one of the main providers of free internet.
During the session, the exchange rate is expected to range between 18.79 and 18.99 pesos per dollar.
Money and Debt Markets
In the United States, the 10-year Treasury note rate rose 4.9 basis points to 4.29 percent.
Derivatives Market
To hedge against a depreciation of the peso beyond 20.00 pesos per dollar, a call option with an exercise date within one month has a premium of 0.71% and represents the right, but not the obligation, to buy dollars at the aforementioned level.
On the other hand, the interbank forward for sale is at 18.9223 at 1 month, 19.2498 at 6 months, and 19.6518 pesos per dollar at one year.
Source: realestatemarket
