Banxico moving towards rate cuts, Brazil’s pension bill

The minutes to the last Mexican central bank meeting, published yesterday, revealed a more dovish shift on the Bank’s Board than we had expected. We now think that an interest rate cut at the next meeting on 15^th August is more likely than not. Elsewhere, Brazil’s pension reform passed its first vote in the lower house of congress with a resounding majority, but the muted market reaction suggests that the good news has already been priced in. We expect Brazilian assets to sour over the second half of the year.