The Day at a Glance | April 23 2021

The Top

*The services sector recorded growth in Europe during April.

*Biden proposes increasing the capital gains tax by almost double (39.6%) for individuals with incomes above 1 million dollars.

*The Mexican Senate approved the Hydrocarbons Law reform bill.

*Some members of the ECB considered reducing the purchasing program in its June monetary policy meeting; Lagarde considers this to be premature.

*The Central Bank of Russia surprised markets by raising the reference rate 50 bp and gives signs of having a more restrictive monetary stance.

Economic environment

Leading economic activity indicators (PMIs) from IHS Markit showed that the economic recovery in Europe strengthened in April. The services sector once again logged growth (50.3), while the manufacturing sector once again recorded a record level of acceleration (63.3). The data suggests that the European economic recovery has started to gain momentum in the 2Q21 after negative effects seen in the first quarter due to winter quarantines. Services grew for the first time in 8 months despite the fact that the sector still faced mitigation measures in various countries of the region. Manufacturing activities are growing at their fastest pace in decades. New orders and employment logged strong figures, while some delays were seen in the delivery of orders and prices increased at their fastest rate since early 2018. Prices seen in the services sector recorded their highest level of acceleration since the start of the pandemic, which is something that could translate into greater inflation for consumers in the following months. In its monetary policy meeting yesterday, the ECB left its stance unchanged, and President Christine Lagarde assured that no withdrawal in stimulus has been proposed, as doing so would be premature. However, recent reports suggest that some members of the Governing Board will be in favor of decreasing the purchasing program in the ECB`s next meeting, scheduled to take place on June 10th.