Since the beginning of the year, there have been conflicting opinions between market estimates (investors) and the Federal Reserve about when to start lowering interest rates in the US.
At the end of last year, the prevailing opinion was that interest rates would begin to fall starting in March 2024. In fact, within the forecasts that are often made on Wall Street—from December to one week ago—80 percent assured that rates would fall in March. However, since the beginning of the year, the spokesmen of the Fed have agreed with the European Central Bank that they should remain at the current level, at least until June of this year.
Last week, this opinion was the one with the most acceptance, to the extent that the tendency to decline, which was previously seen at 80 percent, is now at 60 percent. The truth is, we do not know what will happen, and it will depend on the economic data that will come out in the coming weeks, but from the information received so far, it seems that the central bankers are more correct than the markets. , since the process of cooling the US economy has not been fully understood.
This signal change has the consequence that this week the stock markets, in general, had a negative attitude. At the same time, due to this situation, a strengthening of the dollar was felt against other world currencies.
Regarding Mexico, this subtle change of opinion is what affected the price of the peso, which was taken from the level of 16.80 to reach a high of 17.38. At the end of the week, the losses moderated a bit, although the pressure continued.
In addition to this important issue of the trend of interest rates, the markets are worried about the increases and geopolitical tensions that are happening in the world. Russia’s invasion of Ukraine is not over yet, so it is difficult to know when it will end, how it will end, and what its consequences will be for those involved in Europe and the world in general. The war between Israel and Hamas continues, still as a regional problem, but the chances of this development are still there.
As if this were not enough, the world is also facing attacks by the Houthis, who are already considered terrorists by the United States, which gives this country the power to be more powerful in the attacks against them. Finally, it should also be noted that there have been clashes between Iran and Pakistan due to mutual accusations of protecting terrorists on their borders, which means that the geopolitical panorama, instead of improving, is getting worse and worse, and the markets are paying off. pay attention to.