The Day at a Glance | April 28 2021

The Top

*The FED is expected to continue backing the economy in its monetary policy decision today.

*Biden will present the second part of his spending plans (1.8 trillion) – focusing on education and healthcare; this will come along with a proposal to increase taxes for high income individuals.

*China will discourage steel exports with new taxes starting in May in efforts to reduce carbon emissions.

Economic environment

The FED will remain patient despite the improvement in the US economy`s outlook. This afternoon (1:00 pm Mexico City time), the Federal Reserve`s monetary policy decision will be revealed. No changes are expected to be seen in its monetary policy stance; with rates close to zero (0%-0.25%) and an asset purchasing program running at a rate of 120 billion dollars per month. Markets expect the FED to start sending messages in the following months of its plans to reduce the asset purchasing program and start withdrawing stimuli implemented since the start of the pandemic. However, it`s highly likely that this will happen towards the end of the year – at the moment, the FED is expected to reiterate its commitment to stimulate the economy until enough progress is made regarding its inflation and full employment objectives. Meanwhile, as the pandemic remains as a risk to the economic outlook, it`s possible that the FED will not withdraw any stimuli, despite the data that already shows that the US economy is in a trend of recovery. Tomorrow, the country`s 1Q21 GDP figure will be made public, which is expected to set at 6.9% annualized; an acceleration with respect to the 4Q20 figure. It`s highly likely that the FED will acknowledge the fast pace at which the recovery has occurred and will once again dismiss inflationary risks. However, Jerome Powell`s press conference will be the most relevant event, in which markets will look for signs of plans to normalize the FED`s monetary policy.