Both equity and debt markets took a breather during the month of August to conclude the summer with declines in the main indexes. Within equities, falls were generalized with adjustments of around 2%, highlighting the Mexican stock market, whose performance in pesos suffered a fall of 3.28%, bringing its performance for the year to 9.40%. It is worth noting that despite the adjustment, this market, viewed in dollars, continues to present one of the best returns so far this year. On the other hand, the debt markets also presented slight adjustments due to a still uncertain environment regarding the direction of interest rates.

This uncertainty has been fueled by mixed economic data that has left investors in a difficult environment to navigate. On the one hand, the latest employment reports for the U.S. economy are beginning to show some slowdown in the labor market. Over the past few months, job creation has been slower, with downward revisions and an increase in the unemployment rate from 3.5% to 3.8% in the latest reading. However, this has not been enough to slow the momentum of the U.S. economy, which continues to grow above its long-term potential, with the housing market again stable and consumers still resilient so far. In the coming months we will see if the current rate level is restrictive enough or if additional rate hikes will be required to reach the inflation target set by the central bank.

In contrast to the dynamism of the United States, economic and growth data in the European and Chinese regions are not favorable. On the European continent, inflation has been more difficult to contain and poor manufacturing data have pushed Germany, the largest economy in the region, into recession. In China, meanwhile, severe problems in the real estate sector continue, consumer confidence is weak and government stimulus has not yet been sufficient to believe that the country will reach its 5% growth target.

As a result of the above, the Grupo Inversión committee agreed on the following changes for the portfolios during the month: with respect to equities, it was decided to exit the exposure to China; while for fixed income, market opportunities were taken advantage of to increase fixed rate duration in order to position the portfolios in the medium and long term.