📝 Disagree With Consensus On Banxico's Easing Cycle: Natixis

Consensus of economists believes Banxico will start cutting in February instead of December The results of the Citi-Banamex survey released on September 5th showed that the consensus of economists now expects the first cut in February 2024. The survey median for the start of the easing cycle had been December since early May. The positioning in the TIIE market shows that the market is now expecting the first cut in May, also delaying the start of the easing cycle compared to a few weeks ago.

We think this is related to three factors: 1) the continued hawkish signaling from Committee members, 2) the resilience of the US economy, and 3) rising US 10-year Treasury yields. We disagree with both the market and the consensus of economists, at least for now. We continue to expect the easing cycle to begin in December, as we believe the US economy is likely to slow significantly in Q4. If we are right, the Mexican economy risks slowing sharply in Q4, which would then trigger the start of the easing cycle.

- Natixis