The Day at a Glance | August 22 2023

*S&P Global downgrades the rating of multiple banks in the US due to growing liquidity concerns in the sector. 

*Former US President Donald Trump announced on one of his social media platforms that he plans to surrender himself on Thursday, in Georgia, for the charges against him of attempting to alter the results of the 2020 presidential election in his favor. 

*The results of the National Survey of Construction Companies (ENEC) conducted by INEGI indicated that, during June, construction companies increased their production value by 6.7% m/m, bringing their annual reading to 27.8%. 

*Leaders of BRICS are gathering in South Africa with the intention of expanding the bloc as a counterbalance to the West. 

*Forest fires are affecting Southern Europe due to an extreme heat wave.

Economic environment

Standard & Poor’s downgraded multiple banks in the US. Following Moody’s credit rating downgrade of several regional banks, S&P Global did the same this Monday, arguing that higher financing costs and issues in the commercial real-estate sector are likely to test credit strength of lenders. The Federal Reserve’s upward cycle in the US has increased the cost of deposits for banks, which have been compelled to pay higher interest rates to remain attractive compared to other investment alternatives. It’s worth noting that these downgrades do not pose a life-threatening risk to the financial system, neither in the US nor globally. Likewise, we reaffirm that we do not see the same scenario of capital and fundamental deterioration in Mexican banks, as they have the flexibility and capacity to generate reserves according to their needs, without resorting to capital punishments or asset impairment.