The Day at a Glance | October 26 2020

The Top

· With no fiscal agreement in sight, the US records a record number of COVID-19 cases.

· The Mexican economy continued to recovery during August, even though at a more moderate pace.

Economic environment

The chances of seeing a new fiscal stimulus package in the US have practically disappeared after leader of the Democratic representatives, Nancy Pelosi, assured that the White House modified some of its objectives and expects to receive a counterproposal before continuing negotiations. White House Chief of Staff Mark Meadows also accused Pelosi of changing her goals which has led to an agreement not being reached over the weekend. Sessions close in the Senate today after the voting to approve Amy Coney Barret as Supreme Court Justice. The legislative chambers could counterclaim in a legislative agenda and appear in extraordinary sessions if their members decide to do so, however, it seems highly unlikely for this to happen in the last week of campaigns before the elections on November 3rd. The lack of a fiscal stimulus agreement along with an acceleration in COVID-19 cases in the country, which on Friday and Saturday, daily figures set above 80,000. Both factors have decreased optimism at the start of the week among markets with high chances of seeing the US economy slow down in the last months of the year without any government aid and the latent risk of seeing shutdowns due to the virus`s spread.

INEGI figures recorded a 1.1% monthly expansion in the Mexican economy during August. The Global Indicator of Economic Activity (IGAE by its initials in Spanish) showed a monthly increase in industrial activity (3.3%) and services (0.4%), with contractions in the primary sector of the economy (-5.9%). With this, the economy contracted an annual (-) 8.5% in August and maintained the recovery seen since June. However, the figures reflect a loss in momentum in the rate of recovery as economic activity continues to normalize. Mexico`s GDP remains at 7.37% under levels seen in February. The industrial sector is the one that shows the fastest recovery in the economy, while the services sector barely showed growth in August. The 3Q20 GDP figures are expected to be published on Friday, which are expected to show an annual contraction around 9%.

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