Mexico & the trade war, Brazil’s fiscal malaise

Mexico appears to have found the off-ramp after President-elect Donald Trump threatened to impose a 25% tariff on all imports from the country on day one of his presidency. Even so, given Mexico’s central role in the flow of migrants, drugs and Chinese goods to the US, it will remain in Trump’s firing line and this week’s tariff threat is unlikely to be the last. Elsewhere, the long-awaited ‘spending review’ in Brazil, intended to reassure investors about the health of the public finances, went down like a lead balloon. Coming alongside stronger-than-expected inflation in the first half of November, the central bank may feel compelled to step up the pace of its tightening cycle.