KN Market View 2024-06-09

#KNMarketView

Mexican election results took local markets by surprise, as discussed in previous notes. The USDMXN rose by +8.25%, closing at its highest level since March 2023, with the next resistance at MXN $18.50. Mexican 10-year government bonds also traded under pressure, reaching levels not seen since 2005 (10.59%). We think they look attractive at current levels, with the economy doing well and inflation stabilizing. The Mexican equity market might remain volatile, but consumer demand and nearshoring effects should help companies report good numbers.

Regarding economic data, “US jobs surge casts doubt over interest rate cuts. Employers added 272,000 jobs in May, the US Labor Department said, above expectations of 185,000 new roles” link. US’s 10Y bonds move higher after trading at its two-month low closing at 4.44%.

“China's trade surplus widened to USD$82.62bn in May 2024 from USD$65.55bn in the same period a year earlier, surpassing market expectations of USD$73bn. It was the largest trade surplus since February” link.

This week, the focus will be on US and China inflation rates, the UK unemployment rate, and GDP. Industrial production will be released for major economies. The FOMC economic projections will be released on Wednesday, with no changes expected in the Fed's interest rate decision.