|Day's Range||19.025 - 19.19|
|52 Week Range||18.3935 - 20.6501|
Blackspark Capitol CEO Jose Barrionuevo talks to Yahoo Finance to discuss the implications of the U.S. and Mexico agreement.
Moody's de México, S.A. de C.V. (Moody's) has assigned an Aaa.mx national scale rating to the Central American Bank for Economic Integration (CABEI) proposed senior unsecured floating local notes with a three year tenor, due 19 July 2022, CABEI 2-19. Moody's has also assigned a A1 global scale rating to the notes due 2022, CABEI 2-19.
Following the surprise resignation of Mexican finance minister Carlos Urzua last week and doubts over what the business plan for state oil company Pemex would entail the cost of insuring Pemex bonds rose to the highest level in three years. Credit default swaps (CDS) for Pemex bonds, which traders use to insure against a Pemex default within five to ten years, rose on Wednesday, a day after Urzua stepped down, Refinitiv Eikon data shows. The Mexican peso, Pemex and sovereign bonds all fell on the news of Urzua's resignation.
The RBA Meeting minutes revealed that the Bank would keep the doors open for further ease in the monetary policy by a quarter-point soon. The Euro pair and Cable suffered some huge pullbacks today.
MSCI's Latin American currencies moved o.6% higher in line with emerging market peers as expectations of an interest rate cut by the Fed bodes well for developing market assets. The Mexican peso, which slid following the finance minister's abrupt resignation on Tuesday, gained 0.3%, but overhangs regarding the country's fiscal status kept investors nervous. All five of the Mexican central bank's board members agreed the slowdown in Mexico's economy had been larger than anticipated, with "signs of weakness" in the second quarter, minutes from the June 27 monetary policy meeting showed on Thursday.
(Bloomberg) -- The surprise departure of Mexico’s finance minister Tuesday and his scathing resignation letter added another item to the list of risks that are keeping the peso weak and interest rates high.Finance Minister Carlos Urzua cited disagreements over policy and unsound decision making for his exit, sending the peso as much as 2.3% lower on concern President Andres Manuel Lopez Obrador, known as AMLO, may now shift policy to the left.Urzua departed just as the peso was recovering from President Donald Trump’s threat to impose tariffs in a dispute over immigration and a credit downgrade of the state-owned oil company. Faced with such hard-to-quantify risks, Mexico’s central bank has maintained the highest key rate since 2008 to defend the peso, even as growth slows and the rest of the world cuts borrowing costs.The resignation “raises doubts about future economic, monetary and fiscal policy,” said Felipe Hernandez, who covers Latin America for Bloomberg Economics from New York. It raises the threat of “lingering headwinds for private investment and economic growth.”Urzua was a longstanding Lopez Obrador ally who served as his finance secretary when the president was mayor of Mexico City.“The market is right to take this seriously,” said Ilya Gofshteyn, a strategist in New York at Standard Chartered Plc. “Urzua was seen as ‘the adult in the room’ in the AMLO administration, someone who lent credibility to an otherwise economically heterodox administration.”Regaining TrustThe peso pared initial losses on Tuesday af AMLO tapped Deputy Finance Minister Arturo Herrera to replace Urzua. While Herrera is well known to investors, he won’t find it easy to reassure them that economic policy won’t change.“The conditions under which Urzua resigned, coupled with the uncertainty that has already affected the real economy for several months, makes it difficult for his appointment to have a significant impact on market confidence,” said Jesus Lopez, a strategist at Banco Base in Monterrey, Mexico.Herrera will provide continuity, but whether he is willing to stand his ground on policy discussions is less certain, Citigroup Inc. analysts including Julio Zamora in New York wrote in a note.Herrera said in a press briefing late Tuesday he has great confidence in AMLO and perfect understanding with him. At his daily press conference, AMLO said Wednesday that “there could even be other resignations” within his cabinet. The peso traded 0.6% lower against the dollar as of 9:08 a.m. in New York, the biggest decline in emerging markets. Economic HeadwindsIn a tweet announcing his resignation, Urzua spoke of discrepancies in economic matters and said decisions by Lopez Obrador’s government on matters of public administration lacked foundation.Headwinds for the economy were already mounting. Growth has slowed to just over 1%, while a $106.5 billion pile of debt at state oil company Pemex threatens to undermine government finances. Fitch has downgraded the company’s bonds and one more downgrade -- into junk territory -- could lead to their removal from some indexes, forcing the sale of the bonds and a slump in the peso.“There is a reason real rates are as high as they are in Mexico,” Gofshteyn said. “Tactically bullish MXN views are all good and well, but on any given day a development of this sort can creep up and force position liquidation.”As a result, Urzua’s resignation could be enough to spook Banxico board members and prevent an interest-rate cut any time soon, Edward Glossop, a London-based economist at Capital Economics, wrote in a note to clients.“Even if the peso rebounds, the board will be concerned about a possible deterioration in the fiscal position and credit-ratings downgrades,” Glossop said.(Updates with comments from AMLO in the 10th paragraph.)\--With assistance from Lilian Karunungan and Tomoko Yamazaki.To contact the reporters on this story: Justin Villamil in Mexico City at email@example.com;Sydney Maki in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Julia Leite at email@example.com, Philip SandersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
– after a senior government official resigned. Mexican Finance Minister Carlos Urzúa tweeted his resignation on Tuesday afternoon, citing policy differences with Mexico’s president. The former cabinet member accused the government of appointing unqualified officials and making public-policy decisions without enough evidence.
A gauge of stock markets around the world fell on Tuesday as trade tensions weighed on the outlook for corporate earnings, while Mexico's peso tumbled after the country's finance minister resigned. European and U.S. stocks dropped early after German chemicals giant BASF warned of a 30% fall in its adjusted annual profit, citing trade friction and a global slowdown in growth.
John Jagerson walks us through the numbers surrounding Friday's jobs report. What historical data suggests the market will do over the next 30 daysThe stock market doesn't always have the greatest amount of maturity.At times, it acts like a 3rd grader with an unhealthy obsession on, say, dessert. In this case, "dessert" is increasingly-higher stock prices at the expense of everything else.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAny news or data that might negatively impact that outcome is considered "bad" -- even if the news is actually positive for the broader economy.You try to offer your 3rd grader a healthy bite of broccoli, which would obviously benefit the rest of him beyond his taste buds, but he throws a fit. Dessert or nothing!Last Friday, the market threw its own fit … because it received good news painting the picture of a healthy economy.The U.S. added 224,000 nonfarm payrolls during June. Estimates were for just 160,000 positions. That's a strong, unexpected number.But that positive news was interpreted as a threat to what the market is fixating on -- higher stock prices.Why would a great jobs report jeopardize higher stock prices?Because a strong job report calls into question the need for the Fed to cut rates in July, as the market has been anticipating (the market loves lower rates). After all, with the economy posting such a healthy number, why does the Fed need to goose it further?With this question as our backdrop, today we turn to John Jagerson of Strategic Trader. Regular Digest readers know John as one the smartest quant investors in the business.Being a "quant" simply means John uses real, historical market data to identify patterns and trends. Then he uses that information to help make well-informed predictions as to what might happen in the markets going forward.For example, in mid-May, after a huge down day in the market when things looked especially bearish, John ran a study of past similar situations. Based on that study, he forecasted that the market would actually be up at least 5% come 30 days later. It turns out, we needed an extra week, but 37 days later, the market was up 5.5%.That's the power of using historical data.So, in today's Digest, let's get John's thoughts on the labor report, what it could mean for the Fed's July meeting, and the market's direction over the coming month.***Diving into the labor report and its implications for the marketJeff: So, John, the expectation was for 160,000 new jobs, but the BLS reported 224,000. Would you consider this a blow-out number?John: Well, if you ignore the hyperbolic headlines (Friday) morning, it wasn't that big of a report. This is the 5th highest report over the last 12 months, so it's good but I wouldn't call it a blow-out. I had suggested last month that the extremely low numbers for May could trigger a reversion to the mean with bigger numbers this month due to seasonal/statistical adjustments. That's what happened in the March and April reports as well.Jeff: As we're talking, it's late morning Friday, and the markets are selling off on this positive news. What do you make of this?John: The market is always squirrely on "Labor Fridays" so although I expected good news to be good for prices -- and bad news to be good as well because it motivates the Fed to cut rates -- I'm not shocked that investors are a bit bearish today. In fact, today's selling started before the BLS report when German manufacturing orders were reported with a massive -2.2% drop. That's really bad news for European indexes and it was bleeding over into U.S. equities before the labor report was released.Jeff: With your quant background, let's turn to the numbers now. Given similar strong jobs reports in the past, what might be expect from the market over the coming 30 days?John: I've run the numbers, and over the last 10 years, a positive surprise was followed by higher prices in the S&P 500 30-days later over 70% of the time.Interestingly, when the Fed is easing and cutting rates, a negative surprise also leads to positive 30-day returns 80% of the time, but those highs tend to fade more quickly.Jeff: So, either way, the market is likely headed up? That seems a little odd to me.John: Yes, the market usually goes up after labor reports, but that is pretty much true of anything about the stock market. It's designed on purpose to go up more than it goes down, so it would be a surprise if it were otherwise.However, when the labor report is below expectations with a big miss and the Fed is NOT lowering rates, the 30-day reaction was close to 50-50, which is poor for the stock market that has a long-term average closer to 60% for any random month.Jeff: Okay, so we're looking at a 70% chance of a higher market 30 days from now. But let's turn to the Fed at this point. Couldn't they throw a monkey wrench into all this? Doesn't the strong jobs number make a rate-cut a bit less certain?John: I don't think so. The Fed has painted themselves into a corner in July and I can't see how they can avoid a cut. The market thinks they will almost certainly cut, the Fed's own economic forecasts released last month indicated two cuts this year. Whether the U.S. employment market needs a cut or not, growth is slowing, so a pre-emptive cut to save the business cycle won't seem like a crazy idea.Jeff: Okay, but what if Powell surprises us? Let's say he looks at this data and decides to hold rates steady in July - do you think the markets would take that in stride?John: If the market is still pricing in a cut by the time we get to the Fed's announcement on July 31st then I think not getting that cut would be catastrophic in the short-term for the market. However, if investors have adjusted their expectations and the consensus has flipped to no-cut by the 31st then it's not going to be an issue. At this point, we can't really predict the market's reaction to the Fed in July because we don't know what traders will have priced in by that time.NOTE: At the time of this writing, the CME Group's Fedwatch tool (below) is reporting a 100% expectation for a July rate cut, with a 94.1% expectancy that the cut will be a quarter-point.Jeff: Switching gears a bit, what's your take on Powell? He's developed a reputation for being a bit tone-deaf on what the market wants. Do you think that's fair?John: I think that reputation is undeserved. He is in a weird situation where there is simultaneously a lot of public, political pressure from President Trump that gets a lot of press attention, and market participants have developed new expectations about the Fed's role in the economy. The Fed doesn't typically cut rates when as there is "full employment" and "stable prices" which are the Fed's dual mandate. They aren't really tasked with maintaining asset prices. I personally think the market's expectations are out of whack, and there may not be a great explanation for that. The last couple times the Fed cut rates in an economic situation like this it was during an external crisis (Mexican peso crisis 1994-95 & Asian financial crisis 1997-98).Not to sound too much like a grandpa here, but I know that the majority of folks currently working on Wall Street weren't even in business school the last time the Fed was raising rates so they really don't have a lot of real-life experience with it. Maybe the market has just changed and Powell is now part of the "old school" but I still don't think it changes the fact that the Fed's job, as chartered by Congress, isn't to respond to equity markets. The job is about labor and inflation, both of which are doing fine right now.Jeff: So, a good grade for Powell then.John: Yes, I think Powell is doing fine. He has talked about ending the use of the Fed's economic forecasting "dot plot" which I agree with. I think it's a stupid lagging indicator and just produces more uncertainty rather than less. I learn more towards laissez-faire monetary policy, so I would like the Fed to be a bit slower to take action and less of an active market participant.Jeff: Thanks, John. ***Wrapping up, we're looking at a 70% chance of a higher market in 30 days, and John suggests we're still in for a July rate-cut despite the strong jobs numberBy the way, we've been tracking John's Strategic Trader win-streak here in the Digest. It's currently sitting at 92-of-92 closed, profitable put-write trades, featuring an average annualized return of roughly 48%.If you're interested in taking part in these trades with John and his partner, Wade, but are new to options, no problem. In Strategic Trader, John and Wade teach subscribers all the basics, then provide simple-to-follow trade guidelines, holding the reader's hand throughout the entire process. You'll always know exactly what to do, and when to do it.If you're curious, feel free to take the next step and simply learn more by clicking here -- no commitment. You risk nothing, but as John and Wade's track record illustrates, the upside for your portfolio could be substantial.Have a good evening,Jeff RemsburgThe post Does Friday's Jobs Report Jeopardize a July Rate-Cut? appeared first on InvestorPlace.
Investing.com - The U.S. dollar jumped on Friday after the economy added more jobs than expected in June, dampening expectations that the Federal Reserve will cut rates aggressively to stave off a slowdown.
Most Latin American currencies dipped on Tuesday as optimism around U.S.-China trade talks faded, while the Mexican peso gained on reports U.S. President Donald Trump had held off imposing tariffs on Mexico. The peso jumped about 0.4% to 19.07 per dollar after media reports https://www.bloomberg.com/news/articles/2019-07-01/trump-says-mexico-tariffs-off-the-table-after-immigration-help said Trump praised Mexico's efforts to curb Central American migrants crossing into the United States and added that tariffs on the Latin American country's imports were off the table.
Mexico's currency is expected to fluctuate between 18.5 and 20 pesos to the dollar in July as the market awaits U.S. ratification of a trade deal with Mexico and Canada and threats of tariffs from U.S. President Donald Trump linger, analysts say. The Mexican peso, on track to strengthen slightly in the second quarter, will face challenges stemming from state oil company Pemex's massive debt, Washington's trade war with Beijing and potential fluctuations in U.S. interest rates, analysts say. "We are going to see a July of volatility and the peso's value will be subject mainly to international issues," said Alejandro Padilla, director of fixed income and exchange rate strategy at Banorte.
Moody's de México, S.A. de C.V. ("Moody´s") has withdrawn on June 25, 2019 the ratings of Baa1 (sf) (Global Scale, Local Currency) and Aa1.mx (sf) (National Scale of Mexico) assigned to the certificates BRHSCCB 06 of Hipotecaria Su Casita, S.A. de C.V., SOFOM, E.N.R., that were issued by CIBANCO, S.A. Institución de Banca Múltiple, acting solely in its capacity as trustee. The certificates were backed by a pool comprised of Mexican peso-denominated, fixed-rate, first-lien mortgage loans (RMBS) secured by residential homes located in Mexico originated by Hipotecaria Su Casita, S.A. de C.V., SOFOM, E.N.R. and serviced by Pendulum, S. de R.L. de C.V. Moody's National Scale Credit Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks.
The fate of Latin America's two main currencies have contrasted so much lately that traders and analysts are questioning whether Brazil's real can keep rallying while the Mexican peso slides. The two emerging market currencies usually move in tandem with each other, but foreign trade spats, domestic politics and economic data have driven them apart lately. U.S. President Donald Trump's threat on May 30 to slap tariffs on Mexico may have tipped the balance for money managers to reduce the Mexican exposure in their Latin America funds, according to Standard Chartered senior strategist Ilya Gofshteyn.
Downside for U.S. corporate earnings from China, Mexico trade war should be minimal, writes Mark Hulbert.
Last week, tariffs on Mexico increased the chances the Fed would cut rates. Investors obviously like that. So, stocks rallied. This week, Trump backs off those tariffs. Investors apparently like that, too. Stocks again are rallying. What’s going on?
US JOLTS Job Openings data came out as 7.449 million over 7.240 million expectations. Mexican Peso soared more than 2% over US-Mexico trade deal. Investors seemed to lose interest over Cable, Euro, and Yen.
Investors are expressing optimism ahead of Monday’s open with futures signaling risk-on sentiment and a higher open for stocks in reaction to news over the weekend that tariffs on goods from Mexico have been avoided. President Donald Trump announced Friday after the close that he had “full confidence” Mexico will act on efforts to reduce illegal migration across the U.S./Mexico border. The news sent the Mexican Peso and the Canadian Dollar sharply higher, and both are holding on to overnight gains in the premarket.
Now all investors’ attention again turned to disputes between China and the United States, and markets are hoping for a breakthrough in negotiations after Trump and Xi Jinping meet on the G20 (June 28-29).
Friday’s weak US payrolls have convinced the world that the Fed needs to act, with the weekend news flow centred not just on when the Fed cut, but whether the cuts are front-loaded, with some calls even for a chunky 50bp in the July meeting.
The Mexican peso surged more than 2% on Monday after the United States and Mexico struck a deal on migration to avert a trade tariff war, supporting a rebound in investor risk appetite that boosted the dollar and knocked the safe-haven yen lower. Foreign exchange investors had rushed for the safety of the Japanese yen in recent weeks after U.S. President Donald Trump's threat to slap tariffs on Mexico shook investor confidence. On Monday, the dollar staged a recovery as investors dumped the yen and euro.