Fed Sees Growth in 2026, Trump Unimpressed

Posted on December 13, 2025 by Ignacio Teson

The Federal Reserve (Fed) aims to hand over a solid economy to whoever succeeds Jerome Powell as chair.

After cutting interest rates by 25 basis points on Wednesday, the U.S. Federal Reserve projected faster growth, lower inflation, and stable unemployment heading into the 2026 midterm elections. Policymakers also anticipate the economy will move past a period of volatility and disruption driven by tariffs and immigration, transitioning into a year of solid productivity and resilient consumer spending.

“I really want to hand this job to my successor with the economy in great shape—that’s what I want to do,” Fed Chair Jerome Powell said at his post-meeting press conference, following the central bank’s third consecutive rate cut. “I want inflation to be under control, back down to 2%, and I want the labor market to be strong.”

These projections, however, have failed to satisfy U.S. President Donald Trump. Far from endorsing Powell’s cautious approach, Trump believes rate cuts should be carried out far more aggressively. As a result, he has already drawn up a shortlist of potential candidates to lead the Fed, including Kevin Hassett, his top economic adviser, who would be more aligned with his demands.

Still, even if the next chair inherits a solid economy, they will take charge of a policymaking committee that remains unconvinced of the need for substantially looser monetary policy.

Quarterly projections show that inflation is rising faster, interest rates are higher, and economic growth is slower than central bankers had anticipated last September—just before Trump’s election victory in November. Even so, officials expect fears of what some analysts dubbed “light stagflation”—high unemployment alongside high inflation—to gradually fade.

2026 Outlook and Midterm Elections

According to the Fed’s latest projections, inflation is expected to end 2026 at 2.4%, down from 2.9% projected for the end of this year. Economic growth is forecast to accelerate to 2.3%, compared with 1.7% this year—a positive outcome despite the government shutdown that affected the Trump administration. Meanwhile, the unemployment rate, reported at 4.4% in September, is expected to edge slightly higher before ending 2026 once again at 4.4%.

EU Targets Chinese Imports With €3 Fee on Small Parcels

Posted on December 13, 2025 by Ignacio Teson

The measure will take effect on July 1 and marks the first of several steps the bloc plans to take to curb the surge in such orders.

European Union finance ministers agreed on Friday to impose a €3 ($3.50) levy on all small parcels entering the bloc starting July 1. The measure will apply to shipments valued below €150 ($174).

The decision aims to rein in the flood of low-cost packages sent by Asian e-commerce platforms such as Shein, Temu, and AliExpress. About a month ago, finance officials from the EU’s 27 member states approved the removal of the long-standing tariff exemption for these shipments.

European producers and retailers have increasingly complained about the massive inflow of duty-free imports, which they view as unfair competition. In many cases, they also argue that these products fail to meet EU regulatory standards.

In 2024 alone, roughly 4.6 billion parcels worth less than €150 entered the European market—equivalent to more than 145 packages per second. Of that total, 91% originated in China.

Seeking a permanent solution

According to an EU spokesperson, the €3 levy is a temporary measure and only the first step, to remain in place until the bloc develops a permanent solution to address the issue.

French Finance Minister Roland Lescure welcomed the new tax, calling it a “major victory for the European Union.”

Starting in November 2026, the measure is expected to be complemented by handling fees on the same low-value shipments. In May, Brussels proposed setting those fees at €2 per parcel.

Big Pharma Battles for a $150 Billion Weight-Loss Market

Posted on December 13, 2025 by Ignacio Teson

Beyond giants such as Eli Lilly and Novo Nordisk, pharmaceutical companies like Pfizer have entered the space by acquiring biotech firms.

The global obesity drug market is experiencing a frenetic race between major pharmaceutical companies and biotech startups to capture a share of what is projected to become a business worth up to $150 billion annually over the next decade.

Historically dominated by Novo Nordisk and Eli Lilly, the sector has evolved rapidly—from today’s injectable treatments to a new generation of drugs that promise oral dosing, greater effectiveness, and improved tolerability.

The rivalry between these two companies has drawn intense interest from investors, patients, and competitors alike, turning the fight against obesity into one of the most lucrative areas of the pharmaceutical industry.

Companies with diverse pipelines

Novo Nordisk, the Danish drugmaker that popularized treatments such as Wegovy and Ozempic (semaglutide), continues to expand its portfolio with experimental drugs like amycretin and CagriSema, designed to deliver better outcomes and new modes of administration.

In mid-stage trials, amycretin achieved weight loss of up to 14.5% in patients with type 2 diabetes, with side effects that were mostly mild to moderate.

CagriSema, an injectable combination of semaglutide and another peptide that enhances weight loss, delivered more modest-than-expected results in recent trials. Still, the drug remains on track to seek regulatory approval in early 2026.

Eli Lilly, meanwhile, has seen its obesity treatment propel the company’s market capitalization beyond $1 trillion, underscoring the massive economic impact of these therapies.

The company is also advancing trials of new molecules and therapeutic strategies, including drugs that could offer additional benefits in terms of efficacy.

New pharmaceutical players and oral formats

Beyond the traditional leaders, companies such as Pfizer have entered the market by acquiring biotech firms with promising drug candidates.

Following its acquisition of Metsera, Pfizer gained access to therapies under development such as MET-097i, a once-monthly GLP-1 treatment that delivered weight loss of around 14% after 28 weeks in mid-stage trials.

This approach reflects a key industry trend: the push toward oral formulations or less frequent dosing, which could improve patient convenience and expand the market beyond those willing to undergo weekly injections.

At the same time, other emerging pharmaceutical and biotech companies are exploring novel mechanisms or complementary treatments to traditional GLP-1 therapies. These include drugs targeting alternative hormonal or metabolic pathways, as well as innovations based on RNA technologies and treatments aimed at specific types of body fat. If successful in clinical trials, these alternatives could directly challenge today’s market leaders.

Despite the enthusiasm, the path forward is not without obstacles. Several candidates have posted mixed trial results, and regulators continue to demand robust safety and efficacy data before granting approval.

In addition, the growing presence of generic versions and copycat drugs—particularly in emerging markets—could put pressure on pricing and reshape competitive dynamics worldwide.

Bitcoin Holds $90,000 as Fed Rate Cut Fails to Spark Rally

Posted on December 13, 2025 by Ignacio Teson

Both Bitcoin and Ethereum are approaching a key expiration that could define the market’s next move.

Cryptocurrency markets are trading slightly higher on Friday. According to Binance data, Bitcoin (BTC) is hovering around $90,300, remaining within its recent trading range. Ethereum (ETH), meanwhile, is down 5.3% at $3,089.

Altcoins are broadly lower. Solana (SOL) is down 3.9%, while Dogecoin falls 3.8% and Cardano declines 3.6%.

[[BTC/USD-graph]]

Fed signals caution, Bitcoin avoids a selloff

Although the U.S. Federal Reserve delivered a widely expected 25-basis-point rate cut, the message accompanying the decision was cautious with an eye toward 2026. At the same time, lingering macroeconomic uncertainty continues to cloud the outlook for risk assets, including Bitcoin.

As a result, despite a generally supportive backdrop for cryptocurrencies, analysts note that the Fed’s move failed to generate enough momentum for Bitcoin to break out of its current range, which has been fluctuating between $88,000 and $93,000.

At the same time, Bitcoin and Ethereum are approaching options expirations totaling roughly $4.5 billion. This typically leads to hedges being unwound, strategies rolled over, or positions closed altogether, adding short-term volatility.

Traditional markets

Meanwhile, Wall Street sold off sharply on Friday, as losses in the technology sector—particularly among chipmakers—triggered a broader decline in equities.

The Dow Jones Industrial Average fell 0.5% to 48,458.05 points, the S&P 500 dropped 1.1% to 6,827.05, and the Nasdaq Composite slid 1.7% to 23,195.17.

Mixed Close on Wall Street as Oracle Sinks Almost 11%

Posted on December 11, 2025 by Ignacio Teson

The Dow Jones rallied after the Federal Reserve’s rate cut, while the Nasdaq fell under pressure from a steep drop in Oracle shares.

Nasdaq leads declining stock indices today.

Wall Street’s main indexes ended mixed on Thursday. The Dow Jones climbed after the Fed’s interest-rate reduction, while the Nasdaq was dragged lower by a sharp sell-off in Oracle.

The Dow Jones Industrial Average, made up of 30 major companies, rose 1.34% to 48,704.01 points. The S&P 500, which tracks the largest U.S. corporations, gained 0.21% to 6,901.00. The Nasdaq Composite slipped 0.25% to 23,593.86.

The Fed delivered a widely expected 25-basis-point rate cut on Wednesday—its third in a row—bringing the policy range to 3.50%–3.75%. In the press conference, Fed Chair Jerome Powell said no additional cuts should be expected at the start of 2026.

[[SPX-graph]]

Despite the adjustment, markets—especially tech stocks—reacted negatively after Oracle missed analysts’ estimates, citing $15 billion in excess AI-related spending. Its shares fell 10.83%.

Seven of the S&P 500’s 11 major sectors finished higher, led by materials (+1.96%) and financials (+1.74%). Within the Dow, Visa (+6.1%) posted the strongest gain, while Coca-Cola (-1.57%) saw the biggest decline.

European Markets

Europe’s STOXX 600 rose 0.5% to 581.17 after a muted opening, as concerns resurfaced over stretched valuations in the tech sector following Oracle’s heavy AI-spending plans.

Major regional indexes also advanced, with France’s CAC 40 up 0.8% and London’s FTSE 100 climbing 0.5%.

At least 19 sectors in the STOXX 600 traded higher, supported by optimism after the Fed’s 25-bp cut. However, the central bank warned against further near-term reductions until there is more clarity in the labor market.

Mexican Peso Hits Year’s High, Nears 18 per Dollar

Posted on December 11, 2025 by Ignacio Teson

The peso strengthened on Thursday as the U.S. dollar weakened, one day after the Federal Reserve announced a widely expected interest-rate cut.

The Mexican currency gained ground in Thursday’s session, reaching its strongest level in 17 months following the Fed’s rate adjustment and the subsequent pullback in the greenback.

The exchange rate closed at 18.0354 pesos per dollar, compared with 18.1824 units on Wednesday, according to official data from the Bank of Mexico (Banxico). The move represented an appreciation of 14.7 centavos, or 0.81%.

[[USD/MXN-graph]]

During the day, the dollar traded between a high of 18.2236 pesos and a low of 18.0106. The U.S. Dollar Index (DXY), which tracks the greenback against six major currencies, slipped 0.35% to 98.30.

The Fed on Wednesday delivered a widely anticipated 25-basis-point rate cut—its third in a row—bringing the benchmark range to 3.50%–3.75%. In his press conference, Fed Chair Jerome Powell signaled that rate reductions could pause in early 2026. The central bank’s latest projections point to one additional 25-bp cut in 2026 and another in 2027, with minimal changes to inflation and unemployment forecasts.

Markets, however, are still digesting Powell’s dovish tone and the Fed’s decision to buy short-term Treasuries. Investors now expect roughly 55 basis points of easing in 2026—well above the Fed’s projection of just one cut.

In Mexico, Banxico Governor Victoria Rodríguez said she and other board members will consider a rate cut at next Thursday’s policy meeting, noting rising risks to both growth and inflation.

Powell’s Term Ends in 2026, Putting Fed Independence in Focus

Posted on December 11, 2025 by Ignacio Teson

Once interest-rate cuts are decided, the U.S. Federal Reserve will face a series of challenges next year.

The Federal Reserve is heading into a period that will severely test its independence and governance, amid mounting legal and political pressures. On Tuesday, December 9, the central bank begins a two-day meeting to decide on an interest-rate cut—one of the most closely watched issues of recent months.

That decision will set the stage for a turbulent 2026, marked by the arrival of a new Fed chair—appointed by U.S. President Donald Trump—and the reshaping of the institution’s leadership structure. Several unresolved issues are expected to amplify the divisions already visible throughout this year’s meeting schedule and policy debates.

The challenges the Fed will face in 2026

A new chair

Fed Chair Jerome Powell’s term expires in May, and attention is focused on the name Trump will put forward as his successor. At the top of the short list is Kevin Hassett, one of his key economic advisers, among others. The nomination process will conclude with Senate confirmation, likely in time for the new chair to preside over the Federal Open Market Committee’s June meeting. The Senate Banking Committee will hold a hearing to evaluate the nominee, followed by a full Senate vote.

Powell enjoyed bipartisan support in both of his confirmation votes—an 84–13 approval when Trump promoted him in 2018, and an 80–19 vote in 2022 when he was reappointed by former President Joe Biden.

The next chair, however, is expected to face a much tighter vote, given the administration’s clear intent to exert influence over the Fed. Trump’s most recent nominee to the Fed Board of Governors, Stephen Miran, was confirmed by a razor-thin 48–47 margin, with four Republicans absent.

Power structure

The Fed’s structure is multilayered: a seven-member Board of Governors—appointed by the president and confirmed by the Senate—oversees the system; twelve regional reserve bank presidents manage their own staff and supervisory responsibilities; and the Federal Open Market Committee (FOMC) sets interest rates, consisting of the governors and five rotating reserve bank presidents.

Rate decisions have exposed rifts across these groups as differing views clash over the economic data. Midterm elections will determine which party controls Congress for the remainder of Trump’s term, and that control will shape how quickly—or slowly—the Fed can reach consensus, depending on lawmakers’ economic outlooks.

The Board wields influence far beyond rate policy: it can rewrite central bank communication rules, set budgets and staffing levels for regional banks, and shape how the largest financial institutions are regulated. But major changes require a Board majority, which may limit Trump’s ambitions—he will have appointed only three of the seven seats.

It is also unclear when the next Board seat will become available for the administration to fill. While Powell’s chairmanship ends in May, his Board term runs until 2028, the final full year of Trump’s presidency. If he follows precedent, Powell may step down from the Board in May, but he could choose to remain. The same uncertainty applies to current Vice Chair Philip Jefferson, whose vice chair term ends in September 2027 but whose Board seat—appointed by Biden—extends to 2036.

Mexico Follows U.S. Lead, Approves Tariffs of Up to 50% on Chinese Goods

Posted on December 11, 2025 by Ignacio Teson

The measure, promoted by Claudia Sheinbaum, aims to protect Mexico’s domestic industry and mirrors Donald Trump’s trade policy toward China. It will take effect in January 2026 and will apply to more than 1,400 products.

Mexico’s Senate approved the tariff package on Asian imports on Wednesday, marking a protectionist shift in the country’s trade policy. The legislation imposes duties ranging from 5% to 50% on more than 1,400 products from Asian countries without a trade agreement with Mexico—most notably China.

The new tariffs will take effect in January 2026 and will hit key sectors such as textiles, metals, and auto parts. Although President Claudia Sheinbaum has publicly denied any coordination with Washington, the move closely mirrors U.S. President Donald Trump’s approach in his trade standoff with China.

The timing also appears far from coincidental: the vote took place amid intense trade negotiations with the White House, fueling expectations that Mexico could secure relief from U.S. tariffs on steel and aluminum.

According to the Finance Ministry, the new tariffs are expected to generate an additional US$2.8 billion next year.

Lobbying and international pressure

The initiative, introduced by Sheinbaum in early September, faced pushback from Asian governments, business chambers, and opposition lawmakers, delaying its passage through Congress.

Following the announcement, China’s Ministry of Commerce issued a sharp response on Thursday, saying it would closely monitor Mexico’s tariff regime and assess its impact. Beijing called the measure “unjustified and harmful.”

“China has always opposed any form of unilateral tariff hikes and hopes Mexico will correct such unilateral and protectionist practices as soon as possible,” the statement said, warning that the measures will “substantially undermine” commercial interests.

The auto sector in the spotlight

Chinese vehicles will face the highest tariff: 50%. The figure is particularly relevant given that automakers from the Asian giant now hold 20% of Mexico’s car market—an exponential rise from the marginal foothold they had just six years ago.

The decision has the backing of Mexican officials and industry associations seeking to shield the country’s auto manufacturing base, a pillar of its industrial sector.

The move also aligns with broader regional trends: Canada adopted similar measures last year on Chinese electric vehicles, steel, and aluminum, echoing Washington’s trade stance.

Sheinbaum’s strategy aims to curb the growing practice of “transshipment” of Chinese exports through third countries—a concern shared by the United States under the U.S.–Mexico–Canada Agreement.

Mexican Peso Ends Slightly Higher Against the Dollar After Fed Rate Cut

Posted on December 10, 2025 by Ignacio Teson

The U.S. central bank cut rates for the third consecutive time, in line with market expectations. The dollar weakened after the announcement.

The Mexican peso posted a marginal gain against the dollar in midweek trading. The local currency advanced after the Federal Reserve delivered a widely expected 25-basis-point rate cut in its final policy meeting of the year.

The exchange rate closed the session at 18.1824 pesos per dollar. Compared with yesterday’s official Banxico close of 18.1919, the peso gained 0.05%, roughly one cent.

During the day, the dollar traded between a high of 18.2298 and a low of 18.1701 pesos. The Dollar Index (DXY), which tracks the greenback against six major currencies, weakened 0.62% to 98.62 points.

[[USD/MXN-graph]]

Fed cuts rates

U.S. Treasury yields extended their losses—pulling the dollar down—after the Fed cut interest rates by 25 basis points, matching expectations. It was the third straight reduction of that size.

The Fed’s new economic projections showed policymakers expect only one quarter-point cut in 2026, the same outlook as in September. Three officials dissented.

After the decision, U.S. President Donald Trump said the rate cut was “too small” and argued it could have been larger. The Republican leader has repeatedly criticized Fed Chair Jerome Powell.

In his post-meeting remarks, Powell focused on concerns about cutting rates while inflation remains above target. He noted that price pressures remain elevated partly due to Trump’s tariffs.

Mexico raises tariffs on China

On the domestic front, Mexico’s Chamber of Deputies approved a plan earlier in the day to raise tariffs by up to 50% next year on thousands of imported products from China and other Asian countries. The goal is to strengthen domestic production and address trade imbalances.

The proposal—which still needs Senate approval—would raise or impose new tariffs throughout 2026 on imports of autos, auto parts, textiles, clothing, plastics, and steel from China, India, South Korea, and others.

In the coming days, the peso is expected to trade within a range of 18.15–18.25 per dollar. The main risk remains political: tariff threats, diplomatic tensions, and issues surrounding the USMCA.

Fed Delivers Third Rate Cut, Sticks to One Cut in 2026

Posted on December 10, 2025 by Ignacio Teson

Dissent again surfaced inside the Federal Reserve’s inner circle. With only three meetings left under Jerome Powell’s leadership, uncertainty over the Fed’s future independence is gaining traction.

The Federal Reserve ultimately cut rates to a 3.5%–3.75% range, ending the year with three consecutive reductions. Looking ahead, economic projections showed a notable improvement compared with September’s outlook. Still, questions remain: Chair Jerome Powell will step down in May 2026, and the leading candidate to replace him, Kevin Hassett, is openly advocating for aggressive rate cuts.

In its official statement, the Federal Open Market Committee (FOMC) — the Fed body responsible for rate decisions — argued that “available indicators suggest that economic activity has expanded at a moderate pace,” while “job growth has slowed this year and the unemployment rate has increased slightly through September.”

[[EUR/USD-graph]]

Growing dissent within the Fed’s core decision-making group is becoming a focal point for markets. Three FOMC members opposed the latest cut. Stephen Miran — one of Donald Trump’s closest allies inside the Fed — pushed for a 50-basis-point cut, while Austan Goolsbee and Jeffrey R. Schmid preferred to keep rates unchanged.

Economic projections improve

In their new forecasts, Fed officials expect one additional rate cut in 2026 and another in 2027. However, views remain divided: seven officials favored keeping rates steady throughout 2026, while eight supported at least two cuts.

Markets welcomed the improved economic outlook. The FOMC now expects GDP to grow 1.7%, up from the 1.6% projection in September. For next year, the upgrade is even larger: 2.3% growth, up from 1.8%.

Inflation is projected at 2.9% this year, easing to 2.4% in 2026 and 2.1% in 2027. This marks a significant shift from three months ago, when the Fed expected inflation of 3% in 2025 and 2.6% in 2026.

As for unemployment, the forecast remains unchanged at 4.5%, a level the Fed views as the upper limit compatible with its dual mandate of stable prices and maximum employment.