The Day at a Glance | March 4 2021

The Top

· OPEC+ will hold a meeting today and decide on crude oil production cuts; markets expect an increase in supply starting April.

· The recovery in the US services sector slows down; ISM drops from 58.7 to 55.3, even though it still shows strong expansion.

· Banxico increases its growth estimate for the Mexican economy to 4.8% in 2021.

· US Senate postpones voting on fiscal package until the weekend.

· Chair of the FED Jerome Powell will comment on the economy in a Wall Street Journal Webinar today.

· Economic indicators: Creation of private employment in the US disappoints in February (ADP 117 thousand vs 205 thousand e.).

Economic environment

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) will hold its monthly meeting today and decide on the continuation of crude oil production cuts. Last month, the organization decided to keep 7.2 million daily barrels out of the market during February and March with the intention of keeping global inventories declining and having the oil market stabilize. The greater part of the cuts were carried out by Saudi Arabia as most of the organization`s members believe that the energy market is ready to absorb more production. The OPEC+ will decide on crude oil supply for April and the balance seems to be skewed towards increasing production in 500 thousand daily barrels. Meanwhile, oil prices have stabilized at around $60 dollars per barrel after an extraordinary recovery in recent months.

The US services sector showed the first signs of moderation in its recovery in February. The leading activity indicator of the Institute for Supply Management (ISM) slowed down considerably in February by dropping from 58.7 in January to 55.3. This is the lowest level of expansion in the services sector in the last nine months, mostly affected by extreme climate conditions in the country during the winter. The survey revealed disruptions in productive chains, blackouts and stops in trade in various parts of the country after recording record-low temperatures in up to 9,000 cities; Texas was the most affected state. However, optimism remains regarding the economy`s recovery in the following months; disruptions caused important delays in order deliveries while export orders increased to their highest level since June. Lastly, employment slowed down (52.7 vs 55.2 prev.), in line with the ADP`s private employment report in February, which fell short of estimates; employment data for the entire economy will be made public tomorrow.