The Day at a Glance | June 7 2021

The Top

*There will be more balance of power in the Chamber of Deputies after midterm elections in Mexico.

*Chinese exports continued to grow strongly during May due to global demand; imports recorded their largest rise in a decade because of increases in raw material prices.

*G-7 nations reached an agreement on a minimum corporate tax at a global level.

*The China-US trade relationship is significantly unbalanced: USTR.

*Yellen considers that greater inflation and higher interest rates would benefit American society.

Economic environment

Midterm elections came to an end in Mexico; preliminary results show that political powers will rebalance. According to the Preliminary Electoral Results Program (PREF, designed for the rapid count of votes), the coalition of the Morena-PT-PVEM government will lose majority in the Chamber of Deputies after the 2021 federal elections; this will hinder the advancement of legislative projects that come from the Executive power and require modifications to be made in the Mexican Constitution. With 86.43% of the votes having been counted, Morena took 34.29% of votes (figure lower than what it obtained in 2018; 37.15%), followed by PAN (18.69%) and PRI (17.81%). By coalition, the Morena-PT-PVEM government got 42.53% of votes, while the opposition made up of PAN-PRI-PRN got 40%. The biggest winner was the Movimiento Ciudadano Party, which is now the fourth largest political power with 7% of votes. Results points to a greater balance of powers in the Legislative branch and greater efforts of political negotiation will be necessary to implement different projects. Regarding State elections for Governor, Morena leads preliminary results with 11 States, Movimiento Ciudadano will likely take Nuevo León and PAN will take Querétaro. The race seems to be very close for Campeche, Michoacán and San Luis Potosí. Markets reacted moderately to preliminary results since polls expected a similar outcome.