The Day at a Glance | March 31 2020

Economic activity rebounds in China

After the worst contraction in economic activity in February, China`s manufacturing sector (52 vs 35.7 prev.) along with its services sector (52.3 vs 29.6 prev.) recorded expansion in the month of March, exceeding analysts` expectations. The rebound in PMI`s is mainly attributed to the reactivation of economic activity in China, however concerns of the halt in economic activity at a worldwide level having an effect on the Chinese economy remain. Some Chinese authorities were precise by assuring the road to recovery will be slow despite seeing positive leading indicators. The PMI`s don`t reflect a total return to levels of activity prior to the virus`s outbreak, simply a substantial improvement with respect to February`s PMI`s. It`ll be important for other economic indicators to confirm this extraordinary bounce back regarding the country`s economic activity, even though for now, monetary and fiscal stimuli carried out by Chinese authorities will surely help support recovery in the medium term. According to Bloomberg estimates, the economy is running at 90% capacity; however, its performance will largely depend on foreign demand.

Mexico`s central bank will auction credit in dollars in April

Mexico`s central bank issued a call yesterday to auction up to $5 billion dollars in credit that will help reduce the need for dollars in the banking and financial sectors in the country. The first auction is scheduled to take place on April 1st, with an 84 day maturity period, and dollars will be funded through SWAP lines established a few weeks ago with the United States Federal Reserve. It`s intended the auction will help liquidity in markets, as main banking and financial entities who are awarded these dollars will offer them to their respective clients. On the other hand, according to Bloomberg reports, the Association of Banks of Mexico (ABM) send a letter to the central bank yesterday in which it requires greater measures in order to guarantee liquidity. The ABM suggests implementing long term credit lines similar to those of the European Central Bank, greater measures to provide the bonds market with liquidity, and increase the type of assets accepted by Mexico`s Central Bank`s loan windows. The ABM hopes this will help banks to continue to provide credit during the health emergency


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