The Day at a Glance | February 18 2021

The Top

· FED meeting minutes confirm that the central bank will take an accommodative stance for a longer period of time; sustained inflationary pressures are discarded.

· Texas Governor Greg Abbott orders no exporting by natural gas producers; electricity generation in Mexico would be affected.

· Mexico prepares new reductions regarding PEMEX`s tax burden, according to Treasury Secretary Arturo Herrera.

· Economic indicators: Jobless claims in the US increase to 861 thousand.

Economic environment

The Federal Reserve`s meeting minutes revealed that the agency`s members don’t expect to pull stimulus in the near future. In their monetary policy discussions, the FED`s members considered that it will still take some time for a substantial improvement to be seen in the labor market, which is why they aren`t considering de-scaling the asset purchasing program in the near future. The comments made reinforce the expectation of an accommodative monetary policy in 2021 and 2022. The FED`s members consider that the effectiveness of vaccination programs and fiscal stimuli have helped improve the economy`s outlook, even though the pandemic still raises considerable risks. Regarding inflation, most of the members considered that inflation will rebound this year due to changes in relative prices – but this will not impact the trend of underlying inflation; prices could rise in the following months, but it`s highly unlikely that these upward pressures will have a long lasting effect on inflation.

Mexican government presses US on natural gas after Texas Governor ordered a halt in state gas exports. Governor of Texas Greg Abbott ordered the state`s natural gas providers to avoid exporting outside of Texas until February 21st and asked the industry`s regulators to make sure there is compliance. This decision was made after extreme weather conditions led to a scarcity of natural gas as a winter storm forced a halt in production and the functioning of pipelines. This has important repercussions on electricity generation in Mexico, which largely depends on the US state`s supply of natural gas. Secretary of the Economy Tatiana Clouthier called for coordinated actions to avoid issues on both sides of the border. According to Eikon Refinitiv data, natural gas exports to Mexico have dropped 75% in the last days, which has affected millions of people in the northern part of the country and has halted some automotive plants.

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