The Day at a Glance | Jul 25 2022

The Top

*Janet Yellen assured that there are no signs of a recession in the US economy at the moment.

*Mexico`s economy receded (-) 0.2% monthly during May; at an annual rate, growth set at 1.3% annual.

*China`s Council of State approved a fund to back real-estate companies with close to 80 billion yuan.

*Martin Kazaks, member of the ECB, considers that another aggressive interest rate increase will be necessary in September.

*Germany on the brink of a recession: Ifo.

Economic environment

Yellen optimistic about the fight against inflation. In an interview with NBC on Sunday, Secretary of the Treasury, Janet Yellen, showed confidence in that the FED would be successful in fighting inflation and said that she doesn’t see any signs of the US being in a recession. Yellen granted that it’s likely that a slowdown will be seen regarding employment, but that this doesn’t necessarily imply a recession. Even if the economy logs two consecutive quarterly contractions in the 2Q22, Yellen doesn’t think this should be interpreted as a recession given that the labor market is extremely strong. The Secretary of the Treasury also acknowledged that inflation is high, but that the FED has the necessary tools to control it and expects the stability in prices will be reached without causing a recession. Yellen`s comments contrast with the analysts’ consensus, who believe that a considerable decrease in employment and a recession will be necessary for inflationary pressures to dissipate. On Wednesday, the Federal Reserve will hold a meeting to make a monetary policy decision; the interest rate is expected to increase in 75bp, which would set it at 2.5%, its highest level since 2019.

Mexico`s economy continues to expand. According to the Global Indicator of Economic Activity (IGAE for its initials in Spanish), Mexico`s economy grew at a 1.3% annual rate during May – despite having logged a 0.2% monthly setback. Secondary activities are still below pre-pandemic levels and have started showing signs of slower momentum concerning the recovery at the start of 2022, although they are still expanding at a moderate pace. The analysts` consensus expects growth to set at 1.8% in 2022.