The Day at a Glance | December 15 2020

The Top

· China maintains steady step towards firm recovery.

· The International Energy Agency once again cuts its demand for oil estimates for 2021.

· Moody`s warns that Mexico`s credit rating could be at risk because of the approval of changes regarding the country`s Central Bank Law.

· Economic indicators: Industrial production figures are expected to be published in the US (0.3% monthly e., Nov.).

Economic environment

Chinese growth figures published yesterday showed persistent strength in the Asian economy`s recovery. At an annual rate, industrial production and retail sales grew 7% and 5%, respectively, in line with analysts` expectations. Fixed investment increased 2.6% in the first 11 months of the year, compared to the same period of the previous year. The recovery has strengthened in recent months and is boosted by the control that authorities have successfully achieved to avoid the spread of the virus in the country; in addition to stimuli that supported the recovery in its initial phase. It`s believed that the reactivation in consumption still has room to continue as it`s still far from reaching an 8% rate of growth, figure seen last year. Additionally, the Communist Party has announced that it is preparing bills to stimulate demand even further, seeking to boost Chinese household incomes and consumption. The most recent figures have caused upwards revisions regarding China`s growth in 2021, which is now estimated close to 8% (7.5% prev.), after a 2% rate of growth in 2020

The International Energy Agency once again cut its demand for oil growth estimates for 2021, after warning that the virus`s spread will continue to impact demand for the energy resource and that recovery in the aviation sector will be slower than anticipated. According to the IEA, the market is still fragile and expects demand to reach 96.9 million daily barrels on average next year (200 thousand less than the previous forecast). “It is possible that, after the upcoming holiday season, a third wave of the virus will affect Europe and other parts of the world before vaccine shave time to take effect”, assured the agency as the reason why demand for energy could remain weak. Nevertheless, the IEA expects the oversupply in the crude oil market will continue to be controlled by the OPEC+ while the global economy recovers. The price of oil is still close to $47 dpb (WTI) and has mostly ignored negative news about weaker demand, still being boosted by the optimism revolving around the distribution of vaccines and the global recovery.