“Uncertainty over the likelihood of US President Trump’s announced ramp-up of tariffs on Mexico has roiled markets,” note TD Securities analysts previewing next week’s key macro events.
Key quotes
“Short of a last-minute deal (possible but difficult), we expect 5% tariffs will go into effect on Monday or shortly thereafter. However, we look for resolution within a month or so, given opposition in the US and a strong push to get a deal from the Mexican side.”
“We look for headline CPI to slow to 1.8% in May on the back of a 0.1% monthly gain. The softer monthly increase is largely the result of a normalization in energy prices. Core inflation should remain steady at 2.1% y/y, reflecting a firm 0.2% m/m advance. Although we pencil in a softer 0.2% m/m increase in core services, we expect a long-delayed rebound in core goods (+0.2%).”
“We expect a firm increase in auto sales to be the main driver behind a 0.8% rise in the headline measure for May. Although we expect sales at gasoline stations to remain supportive of the headline figure, it will be at a lower magnitude that reflects stabilization in gasoline prices. Furthermore, we anticipate sales in the key control group to rebound modestly at 0.2% m/m.”
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