Mexico’s inflation rate experienced a notable decline in August 2024, falling to 4.99% from a 14-month high of 5.57% in July.

This decrease exceeded economists’ expectations, who had predicted a more modest drop to 5.09%.

The latest figures from the Instituto Nacional de Estadística y Geografía (INEGI) highlight a significant shift in Mexico’s economic landscape, suggesting a potential stabilization of consumer prices that could influence both policy decisions and public sentiment moving forward.

Mexico’s inflation decline: key contributors

The sharp reduction in inflation is largely attributed to declines in several key sectors.

Food and non-alcoholic beverages, which had previously driven inflation upwards, fell to an annual rate of 5.98% from 7.77% in July.

This change reflects a significant reversal, as food prices are typically volatile due to seasonal variations and supply chain issues.

Other notable contributors to the inflation drop included alcoholic beverages and tobacco, which decreased to 4.26% from 4.45%, and housing and utilities, which fell from 5.72% to 5.14%.

The health sector also saw a decline, with inflation rates dropping to 4.52% from 4.86%.

These reductions signify a broader stabilization in consumer prices for essential services and commodities, offering relief to households dealing with rising living costs.

Inflation rates for education and miscellaneous goods and services also saw slight reductions—6.09% from 6.37% and 4.28% from 5.54%, respectively.

Notably, the core inflation rate, which excludes volatile items, fell to 4% in August, the lowest level since February 2021.

On a month-to-month basis, the Consumer Price Index (CPI) saw a minimal increase of 0.01% in August, a significant drop from the 1.05% rise recorded in July.

This monthly increase was below the anticipated 0.09%, indicating that consumer prices are stabilizing.

This slow rise may provide temporary relief for consumers who have faced escalating inflation rates.

Mexico inflation: implications for monetary policy

The decrease in inflation has substantial implications for monetary policy and consumer confidence.

As inflation rates stabilize, the Bank of Mexico may reassess its approach to interest rates, potentially easing policies designed to combat rising inflation.

Such adjustments could create a more favorable financing environment, fostering growth in previously sluggish sectors.

For the public, lower inflation translates into relief for household budgets.

As essential goods become more affordable, consumers may find themselves with extra disposable income, potentially boosting spending—an important driver of economic recovery and growth.

This positive shift in economic conditions may enhance public sentiment, leading to a more optimistic outlook on personal finances and future consumption trends.

Mexico’s annual inflation rate dropping to 4.99% in August 2024 reflects both economic resilience and market adaptation.

As different sectors contribute to easing inflationary pressures, officials will monitor these trends closely to guide future monetary policy.

Understanding these inflationary shifts is crucial for maintaining economic stability and addressing the everyday impact on citizens’ lives.

As Mexico adapts to this evolving economic environment, the effects of these changes will be felt nationwide.

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The upcoming debate between Vice President Kamala Harris and former President Donald Trump on Tuesday is set to be a defining moment in the 2024 election cycle.

With the race currently locked in a near dead heat, both candidates face immense pressure to sway undecided voters and solidify their bases.

This contest comes at a critical juncture, with the nation divided, voter enthusiasm high, and key battleground states up for grabs.

Harris gains ground, but Trump remains competitive

Recent polling indicates that Harris, who took over the Democratic ticket after President Joe Biden’s withdrawal, has made gains in popularity, but not enough to comfortably pull ahead of Trump.

In a New York Times/Siena College poll released on Sunday, Trump holds a narrow 2-point lead over Harris, though Harris maintains a slight national lead, hovering between 1 and 3 percentage points on average.

However, Republicans hold an advantage in the Electoral College, making Harris’ current lead less substantial when considering the overall election outcome.

The race closely resembles Hillary Clinton’s narrow popular-vote victory in 2016, as opposed to Biden’s 2020 win, when he secured both the popular vote and the Electoral College.

Battleground states in play

The 2024 election is poised to be determined in a handful of battleground states.

According to polling averages from RealClearPolitics, FiveThirtyEight, and Nate Silver’s Silver Bulletin, seven key states are within 3 points of either candidate.

In Wisconsin, Harris holds a 2.7-point lead in the FiveThirtyEight average, while Trump maintains a 2.1-point edge in Arizona according to the Silver Bulletin.

These slim margins reflect a deeply divided electorate and underscore the importance of Tuesday’s debate.

Both candidates need to appeal to voters in these pivotal states, where the outcome could determine the next president.

Harris’ favourability and room for growth

Kamala Harris has seen her favorability rating steadily increase since she took over the Democratic ticket.

On June 27, her favorability was 39 percent, rising to 48 percent in recent polls.

While not overwhelmingly popular, Harris is generally more well-liked than Trump, whose favorability remains around 44 percent.

There is significant upside potential for Harris in the upcoming debate, as polls show that 29 percent of voters still feel they do not know enough about her.

In contrast, 90 percent of voters claim to have all the information they need about Trump, suggesting Harris could benefit from strong debate performance by appealing to undecided or uncertain voters.

Third-party vote share declines

Earlier in the election cycle, third-party candidates posed a potential threat to the major-party nominees, with polling averages showing a significant share of voters considering alternatives.

However, recent developments have drastically reduced this possibility. Robert F. Kennedy Jr. has largely exited the race, and polls no longer consistently include him as an option.

This decline in third-party interest has contributed to a more traditional two-party race.

In a recent New York Times/Siena College poll, Libertarian candidate Chase Oliver garnered 2 percent, while Green Party nominee Jill Stein received just 1 percent. This reduction in third-party support helps concentrate the focus on the main candidates.

Voter enthusiasm: A tight race

Voter enthusiasm is another area where the candidates are nearly tied. Both Harris and Trump enjoy similar levels of enthusiastic support.

According to the New York Times/Siena poll, 72 percent of Democrats describe themselves as “very enthusiastic,” compared to 69 percent of Republicans.

Additionally, 63 percent of Harris voters and 58 percent of Trump voters report being “almost certain” to vote.

This parity in voter enthusiasm suggests that turnout will be critical, and neither candidate can afford to lose momentum.

The economy: Trump’s enduring advantage

The economy remains a central issue for voters, and Trump continues to hold an edge on this front. In the latest Wall Street Journal poll, 51 percent of voters believe Trump is better equipped to handle the economy, compared to 43 percent who favor Harris.

This represents a slight improvement for Harris, but Trump’s advantage on economic issues persists.

For Harris, narrowing this gap will be a key objective in the remaining weeks of the campaign. In 2020, Biden and Trump were evenly matched on economic trust, with each candidate garnering 49 percent of voters’ confidence.

Harris’ team hopes to close the current 8-point gap, particularly in battleground states where economic concerns are front and center.

Americans’ views on the direction of the country

A consistent theme throughout this election has been Americans’ dissatisfaction with the direction of the country. On June 27, only 25 percent of voters believed the country was on the right track, with 65 percent saying it was headed in the wrong direction.

These figures have improved slightly, with 27 percent now feeling positive about the country’s trajectory, but 63 percent remain pessimistic.

Interestingly, a majority of Harris supporters (56 percent) believe the country is moving in the right direction, while nearly 90 percent of Trump voters feel the opposite.

However, more than a quarter of Harris voters (28 percent) still think the country is on the wrong track, suggesting she is drawing support from voters frustrated with the current state of affairs but unwilling to back Trump.

The debate’s impact and what’s at stake

The upcoming debate presents both opportunities and risks for Harris and Trump. For Harris, it’s a chance to solidify her rising popularity and connect with voters who remain undecided or unfamiliar with her platform.

For Trump, it’s an opportunity to regain momentum and shift the narrative back in his favour.

While Harris has gained ground, the race remains far too close for comfort, and the Electoral College advantage held by Republicans adds another layer of complexity.

Both candidates will need to perform strongly on Tuesday to gain an edge in this razor-thin contest.

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The yen carry trade, a popular strategy where investors borrow yen at Japan’s low interest rates to invest in higher-yielding assets, may once again be influencing global markets.

Despite imminent rate cuts in the US, the S&P 500 dropped 4.3% last week, leading many analysts to speculate that the unwinding of the yen carry trade is not yet over.

As the Federal Reserve debates further rate reductions, the impact of Japan’s monetary policy on global financial markets remains a key focus for investors.

Japan’s interest rate hike shocks markets

n a surprising move, Japan recently raised its interest rates, which triggered a sell-off in global stocks.

Investors scrambled to unwind their carry trades, selling off assets purchased with borrowed yen, causing markets to slump.

This largely unexpected rate hike highlighted the fragility of the global financial system when it comes to Japan’s historically low interest rates.

Bank of Japan (BoJ) Governor Kanuo Ueda added fuel to the fire when he hinted at further rate hikes in the future.

During a parliamentary hearing two weeks ago, Ueda stated that Japan’s short-term rates are still very low and could rise if the economy remains strong.

This statement has heightened concerns that more disruptions may be on the horizon as the BoJ shifts toward tighter monetary policy.

Experts warn of further turbulence

JPMorgan was among the first to predict that Japan’s rate hikes would lead to significant market volatility.

The bank warned that the August sell-off, sparked by Japan’s initial rate increase, was just the beginning.

This view appears to be playing out, with last week’s developments in both Japan and the U.S. suggesting further unwinding of the carry trade is likely.

Ed Yardeni, president of Yardeni Research, believes that the yen carry trade will continue to unwind, especially if the US implements a 0.5% interest rate cut soon. While last week’s employment data showed signs of weakness, Yardeni noted that this may lead to unexpected short-term growth, providing a temporary boost to markets.

However, Yardeni is clear in his assessment: the ongoing market slump is primarily a result of the yen carry trade still unwinding.

As investors unwind their positions, selling off assets financed with yen, global markets are feeling the pressure.

‘Risk-off’ mood to drive further unwinding of carry trades

Kathy Lien, managing director at BK Asset Management, holds a more pessimistic view.

She argues that the current “risk-off” mood across financial markets will drive further unwinding of carry trades, especially as investors brace for more economic uncertainty.

Lien’s outlook is particularly bleak for the stock market in the coming months, as the unwind of carry trades could exacerbate existing market volatility.

The Japanese yen has long been the currency of choice for carry trades, given Japan’s low interest rates.

As the BoJ begins raising rates, the repercussions could be far-reaching. Some experts warn that the monetary damage from an ongoing unwind of the yen carry trade could be immense, potentially running into trillions of dollars in losses.

With less than two months until the US elections, investors are particularly wary of market disruptions.

The intersection of Japan’s evolving monetary policy and US political uncertainty has left global financial markets on edge.

While some analysts hold out hope that forthcoming rate cuts in the US could stabilize markets, the lingering threat of the yen carry trade unwinding remains a key concern.

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Copenhagen, Denmark’s capital, is making a bold move to join the race for the 2036 Summer Olympics.

The city has allocated 500,000 kroner from its 2025 budget to conduct a feasibility study, exploring the potential and requirements for hosting the prestigious event.

As global cities reassess the financial and logistical challenges of hosting the Olympics, Copenhagen’s bid is expected to highlight its commitment to a smaller, more sustainable Games.

Denmark invests in Olympic feasibility study

The Danish capital’s significant investment of 500,000 kroner is dedicated to assessing the viability of hosting the Olympics.

This initial funding will help identify the necessary steps for Denmark to enter the bidding process.

In addition to the main Olympic Games, the study will also evaluate the feasibility of hosting the Youth Olympic Games, a smaller-scale version of the Olympics scheduled to take place in Dakar in 2026.

The Youth Olympics, held every four years, serve as an important precursor for cities considering a bid for the main event.

Copenhagen’s vision for a sustainable Olympics

Copenhagen’s approach to the Olympics is notably unique.

Mia Nyegaard, the city’s Culture and Leisure Mayor, has articulated a vision for hosting the “smallest and most sustainable Olympics ever.”

This ambitious goal aims to minimize environmental impact while maximizing social benefits for the city.

Copenhagen’s focus on sustainability aligns with recent International Olympic Committee (IOC) reforms, which have introduced greater flexibility and cost-reduction measures in the bidding process.

These changes have made the prospect of hosting the Olympics more appealing to cities like Copenhagen, which are eager to showcase their green credentials.

Future Olympic hosts: Los Angeles, Brisbane

With Los Angeles confirmed as the host for the 2028 Summer Olympics and Brisbane selected for 2032, Copenhagen’s earliest opportunity to host the Games would be 2036.

The city’s interest is buoyed by past encouragement from IOC President Thomas Bach, who in 2018 expressed confidence in Denmark’s capability to organize a “fantastic Olympic Games, organizationally and logistically.”

This endorsement has likely spurred Danish officials to explore a bid further, despite potential competition from other European cities with similar ambitions.

Poland has also expressed interest in hosting the Olympics, with Polish Prime Minister Donald Tusk recently suggesting that Warsaw could be a contender for 2040.

The emergence of Warsaw as a rival adds another layer of competition for Copenhagen, which will need to emphasize its unique sustainability and cost-effectiveness advantages.

The IOC’s new regulations encourage cities to present innovative and realistic plans that balance financial prudence with the well-being of residents.

Historically, high costs, significant disruptions, and questionable long-term benefits have deterred potential host cities from bidding for the Olympics.

The IOC’s 2021 reforms aimed to address these concerns by introducing cost-cutting measures and increased flexibility in the bidding process.

These changes were designed to revive interest in hosting the Games by reducing the financial burden and encouraging cities to propose creative, smaller-scale concepts that align with modern sustainability and economic goals.

The feasibility study in Copenhagen will play a crucial role in determining whether the city will move forward with a formal bid for the 2036 Olympics.

The study will identify any gaps in infrastructure, logistics, and financing that need to be addressed to create a compelling proposal for the IOC.

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China’s exports rose by 8.7% year-on-year in August, surpassing the forecasted growth rate of 6.5% in US dollar terms, according to data from the customs agency.

This robust growth outperformed expectations and indicates continued strength in China’s export sector despite broader economic challenges.

Imports increase by 0.5%

In contrast to the export performance, China’s imports grew by just 0.5% year-on-year in August. This was below the anticipated 2% increase, as per a Reuters poll.

July had seen stronger import growth of 7.2%, which was more than expected.

Exports to major trading partners show varied performance

China’s exports saw growth across its major trading partners. Shipments to the European Union (EU) experienced the most significant increase, rising by 13% from the previous year.

Exports to the United States and the Association of Southeast Asian Nations (ASEAN) also rose, reflecting robust demand in these regions.

Conversely, imports showed mixed results. Imports from the US rose by 12% in August, while those from the EU declined. Imports from ASEAN increased by 5%.

Imports from Russia saw a minor decrease of 1%, even as exports to Russia grew by 10%.

Also read: Japanese chip equipment firms rely on China sales amid US export curbs

Core CPI rises by 0.3%

Official data released on Monday revealed that China’s core consumer price index (CPI), which excludes volatile food and energy prices, rose by 0.3% year-on-year in August.

This represents the slowest increase since March 2021, according to Wind Information. The subdued CPI growth underscores ongoing economic pressures and a sluggish domestic demand environment.

Export strength amid rising trade tensions

The rise in China’s exports comes as the country faces increasing trade tensions with the US and the EU. These tensions have led to additional tariffs on Chinese products, including electric cars.

Despite these challenges, the export sector remains a bright spot in China’s economy, which is otherwise struggling with weak domestic consumption and other economic headwinds.

China’s reliance on exports highlights the ongoing adjustments the country is making in response to global economic shifts and internal challenges.

As the global trade landscape continues to evolve, the ability to sustain and grow exports will be crucial for China’s economic stability.

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