Insights 
VT 
Mexico’s industrial output showed a year-on-year improvement in June, moving from -0.8% to -0.4%.
This data reflects a slight recovery in the industrial sector over the period.
Narrowing Contraction
The change indicates a narrowing contraction compared to previous months.
Overall, the figures suggest a gradual but positive shift in Mexico’s industrial performance.
We are looking at the June industrial output data from Mexico, which showed a slight improvement. The contraction narrowed to -0.4%, suggesting the worst of the industrial slowdown might be behind us. This figure is a key piece of the puzzle as we position ourselves for the coming weeks.
More recent data supports this cautious optimism, as the July 2025 inflation reading just came in at 4.1%, continuing a slow downward trend. This has likely contributed to the Mexican Peso’s recent stability against the dollar, holding firm around the 17.30 level. These developments suggest that underlying economic resilience is gradually building.
Derivative Trading Strategy
For derivative traders, this environment suggests selling out-of-the-money puts on the iShares MSCI Mexico ETF (EWW) could be a viable strategy. This approach benefits from the stable-to-improving outlook and allows us to collect premium from the remaining market uncertainty. We are not expecting a massive rally, but rather a floor forming under key Mexican assets.
Looking back at the aggressive rate-hiking cycle that defined 2023 and 2024, the central bank’s decision to hold rates steady in early August 2025 signals a major policy shift. We believe Banxico is now comfortable pausing to assess the impact of its past tightening on the economy. This pivot reduces the immediate risk of further economic shocks from monetary policy.
A critical factor remains the health of the U.S. economy, Mexico’s largest trading partner. The latest U.S. jobs report for July 2025 showed modest but steady growth, which is a positive signal for continued demand for Mexican exports. We will be closely watching for continued stability in U.S. consumer spending as a forward indicator for Mexico’s manufacturing sector.
