The Day at a Glance | Aug 4 2022

The Top

*China fired 11 missiles close to Taiwan in one of its largest ballistic tests in decades.

*The Bank of England increased rates in 50bp to 1.75%; it warns of a prolonged recession that could limit the increasing rates cycle.

*Fiscal package sponsored by Democratic Senators would reduce the deficit in 102 billion dollars in 10 years: CBO.

*Consumer confidence in Mexico decreased slightly in Mexico during July: 41.3 vs 43 prev.

*Real-estate bonds backed by the Chinese state logged record devaluations on Thursday in light of fears of default.

Economic environment

China carried out military exercises. China´s military started carrying out a series of ballistic tests close to Taiwan on Thursday. According to the Taiwanese Ministry of Defense, China´s military fired 11 Dongfeng land missiles towards Taiwan´s northern, eastern, and southern seas. This is China´s largest missile testing exercise in decades – as a response to Nancy Pelosi´s visit to the island. It´s speculated that some missiles could have passed over Taiwanese territory, something that would imply a serious escalation in tensions; although the Taiwanese Ministry of Defense denied commenting on the matter. China also carried out long distance missile tests, which reached targets west of Taiwan close to the islands of Wugiu, Dongyin and Matsu. Boats accustomed to transporting goods across the Taiwan Strait have started avoiding risk zones. Taiwan´s government assured that the consequences on the transportation of goods are of no concern. Up to 27 Chinese fighter jets were detected close to Taiwanese airspace, and 22 of them crossed the established limits in the Taiwan Strait. South Asian Ministers called for these actions to be contained as a miscalculation could destabilize the region. In the United States, recent reports revealed that White House officials unsuccessfully tried to convince Nancy Pelosi to postpone her visit to Taiwan. There are even talks that members of the National Security Council and the Department of State met with Pelosi´s team to lay out the geopolitical risk of her actions. Tensions in the Taiwan Strait are now another factor to consider regarding the high level of uncertainty at a global level.