The Day at a Glance | June 25 2021

The Top

*Biden announced a bipartisan agreement regarding spending on infrastructure: 973 billion in 5 years and up to 1.2 trillion if it`s extended to 8 years.

*Movements in interest rates will depend on the evolution of inflation and shocks that affect it: Alejandro Díaz de León, Governor of the Bank of Mexico.

*The European Economy will recover faster than expected, however, it still requires monetary and fiscal backing: ECB.

*Economic indicators: IGAE shows a (-) 0.2% contraction in Mexico`s GDP in April; PCE inflation in the US slightly exceeds estimates during May (3.9% annual vs 3.6% e.).

Economic environment

President Joe Biden announced a bipartisan agreement regarding spending on infrastructure. Yesterday, President Joe Biden announced that an agreement was reached with Republicans regarding spending on infrastructure. The plan considers 579 billion additional dollars of federal spending and a total of 973 billion dollars in investment in the next 5 years. If the plan is extended to 8 years, the program would consider a total of 1.2 trillion dollars, practically half of the 2.25 trillion proposed by Biden. Many of Joe Biden`s original initiatives were discarded by Republicans, but Biden considered it a good thing that there was willingness to work for the country`s sake. The main criteria that will receive investment are transportation (312 billion), other infrastructure (266 billion), roads, bridges and large projects (109 billion), electricity (73 billion) and broadband (65 billion). The program is not funded with a rise in taxes nor will it pull back the corporate tax cut carried out by Donald Trump, but rather it will be made through the restructuring of federal spending, public-private associations and greater efficiency in tax collection. Despite the bipartisan agreement, it`s unclear that the proposal will be approved by Congress as it was presented – since there is still strong opposition on behalf of Republicans. Additionally, the package doesn’t include spending on health or education as Democrats are preparing a seperate law initiative that would go through a different process of approval in Congress during the summer. Biden has assured that he would only sign initiatives if both are approved by Congress; in other words, if Republicans do not approve the spending on health and education project, he would not sign the infrastructure spending plan. Negotiations still have a long road ahead before any approval occurs in Congress.