The Mexican peso is up around 1.5% in early Asia trading, reacting to the after-hours news of a ‘deal’ between US and Mexico over the migration crisis.
For now, the post-Trump drop has not been entirely erased (while stocks have soared well above that dip)…
Perhaps, as Goldman warned, it is because the tariffs issues “not dead, just dormant” and could be resumed if Mexico doesn’t enforce the agreement, situation at the border changes or amid upcoming U.S. elections.
Goldman Sachs chief Latin America economist Alberto Ramos notes in a report this weekend that avoiding tariffs and an eventual escalation of frictions with the U.S. is a “net positive outcome for markets, but not a free lunch or risk-free proposition for Mexico,” as Mexico’s budget is “increasingly tight.”
Ramos adds that concessions made by the Mexican authorities “could also be politically costly for President Lopez Obrador, whose political support base is not particularly engaged on Central America asylum and migration to the U.S. issues.”
via ZeroHedge News http://bit.ly/2WXWnjM Tyler Durden