A US slowdown remains a clear and present danger.
We think a sustained period of outperformance in the US economy will fade in the coming months, with the peso likely to come under selling pressure in early 2024 as investors brace for a slowing in exogenous capital flows. Inbound investment looks vulnerable, with large multinationals likely to soft-pedal the realignment of global manufacturing footprints in response to a reversion in American consumer demand, and a relatively mild rise in Hispanic unemployment rates could take a serious toll on monthly remittance volumes. Historically, episodes of Mexican peso weakness have been associated with sharp slowdowns in the US economy – illustrated...