Mexico's S&P/BMV IPC index has climbed significantly, approaching near-record levels around the 58,400 mark. This surge is attributed to the robustness of Mexico's export sector and the central bank's strategic easing measures that have strengthened domestic financial conditions. In March, Mexico reported a trade surplus of $3.44 billion, marking its second straight monthly surplus. This performance highlights the economy's ability to withstand potential tariff challenges from the US and adapt to the tighter supply chain dynamics anticipated under the forthcoming 2025 North American trade agreement adjustments.
Concurrently, the Banco de México implemented its third successive 50 basis-point rate reduction on May 15, bringing the rate down to 8.50 percent. This move has successfully reduced borrowing costs while maintaining attractive real yields, thereby promoting credit expansion and bolstering profitability within the financial sector. Additionally, a recent de-escalation in US-China trade tensions and increased expectations of Federal Reserve rate cuts—triggered by falling US Treasury yields following Moody’s downgrade of US debt—have led to a shift in global capital flows towards emerging market equities with higher yields, notably benefiting countries like Mexico.
