The Day at a Glance | December 8 2021

The Top

*Democrats and Republicans reach agreement to increase the debt ceiling; the increase will be enough to fund the government throughout 2022.

*It will take more time for inflation in the Eurozone to slowdown: Luis de Guindos, Vice-President of the ECB.

*Investigations in South Africa confirmed that Pfizer`s vaccine lost efficacy against the Omicron variant; a third dose is necessary.

*Janet Yellen suggests increasing the production of domestic goods in order to reduce U.S. dependency on global productive chains.

*Olaf Scholz was elected as Chancellor by the German Parliament; Angela Merkel`s 16 year era comes to an end.

*U.S. trade deficit was reduced strongly during October; exports increased to record levels.

*Evergrande didn`t pay interest payments on dollar bonds, which could lead it to start a long default process.

*Economic indicators: Inflation is expected to become more moderate (12.1%e. annual) and consumer prices are expected to accelerate (2.5%e.) in China.

Economic environment

U.S. Congress agrees to increase debt ceiling. Majority and minority leaders in the Senate, Democrat Chuck Schumer and Republican Mitch McConnell, announced that an agreement has been reached to increase the federal debt ceiling and avoid non-payments starting this month. The agreement took shape in a legislation approved by the House of Representatives yesterday, which will allow the Senate to modify the process and decide to increase the debt ceiling by simple majority. Due to the changes in the process, Democrats will have an opportunity to increase the debt ceiling in the following days. The amount it will increase to is yet to be determined, but it`s expected to be enough for the federal government to be financed throughout all of 2022 (around 2 trillion dollars). Republicans agreeing to this will allow them to argue that Democrats are responsible for increasing the country`s debt in the 2022 elections. Congress`s actions took place a week before the deadline (Dec. 15) defined by Secretary of the Treasury Janet Yellen as the date when the Treasury would have run out of resources. The Bipartisan Policy Center estimates that the Treasury would fall into default between December 21 and December 28, which is why an agreement to increase the debt ceiling is crucial in the following days.