The Day at a Glance | December 6 2021

The Top

*James Bullard (St. Louis FED) estimates that the unemployment rate will drop under 4% in the 1Q22, enough to speed up the withdrawal of stimuli.

*Consumer confidence continues to improve in Mexico (45.8 Oct. vs 44.1 prev.).

*The People`s Bank of China reduced its reserve requirements for banks in order to counter the economic slowdown.

*Evergrande must face payment of 82.5 million dollars in order to avoid default after new grace period; it will include bonds denominated in U.S. dollars in its restructuring process.

*Omicron cases have been detected in one third of U.S. states.

Economic environment

FED on track to speed up the withdrawal of stimuli. In recent public statements, members of the FED have reiterated that they will consider increasing the pace at which the purchasing program is being withdrawn in their next meeting, scheduled to take place on December 14-15. It`s estimated that the FED will halt purchases in March and prepare itself for higher rates due to inflationary risks in 2022. In fact, employment data made public last Friday confirmed a trend of decreasing stimuli on behalf of the FED, despite logging disappointing figures. James Bullard, President of the St. Louis FED, assured that the employment report was solid, despite the disappointing number of jobs created. According to Bullard, employment surveys have brought data that suggests that figures will be revised upwards in the following months and that the unemployment rate will fall under 4% very soon – within the first few months of 2022. This confirms a strong labor market, which gives a faster monetary normalization process a green light in the U.S. Bullard is in favor of increasing the interest rate twice next year, even though he hasn’t suggested when this process should start. In the FED`s meeting next week, new macroeconomic forecasts are expected to be made public, in which members will make their expectations of interest rates known; it`s likely that the start of increasing rates will be moved up to 2022.