The Day at a Glance | March 6 2020

FED willing to act again

According to Bloomberg reports, President of the San Luis Federal Reserve James Bullard assured that the central bank would be willing to act again, this time with greater monetary stimulus in an attempt to calm markets. American treasury bonds continue to record day-to-day all-time low yields, the lowest level dropping to 0.69% this morning. Stockholders show signs of an elevated risk aversion and try to find safe haven amidst nervousness triggered by growing fears of a recession. “Everything is on the table. We are willing to do more. But we are monitoring the situation. We can meet at any time,” said Bullard. Concerns spread to credit markets, with some indicators (spread between rate forwards and daily swaps are broadening rapidly) starting to point to growing risks in the banking sector. Markets are counting on a new 50 bps cut to be carried out on March 18th with a 62.6% probability.

USA employment exceeds estimates

February´s figures recorded another solid expansion regarding job creation in the US economy. 273 thousand jobs were created in the month and the unemployment rate was maintained at 3.5%, according to the Bureau of Labor Statistics. The rise is mainly due to hiring in the healthcare sector as well as in social assistance (+57 thousand), as the US prepares for the coronavirus´s impact. Other sectors that strongly contributed were food and beverage (+53 thousand), government jobs (+45 thousand; especially in education), and construction (43 thousand). Salaries remained with an annual growth rate of 3%, in line with estimates.

AMLO speaks with BlackRock CEO

Mexican President Andrés Manuel López Obrador stated through Twitter this morning that he had a conversation with BlackRock´s CEO Larry Fink. According to the President, Fink reaffirmed his confidence in Mexico amidst a complicated market environment. BlackRock is the world’s largest asset manager, and the President´s message aims to maintain portfolio investors’ confidence regarding Mexican assets. On another note, Moody´s assured it does not plan to revise national oil company PEMEX´s credit rating until mid-year, as it finds no immediate catalyst that would warrant any modification. The statement was made after PEMEX published it had practically doubled its losses in 2019, and PEMEX bonds whose maturity is on 2027 fell on Thursday, broadening their spread with comparable sovereign debt instruments to their highest level since September.

OPEC fails to reach an agreement

The Organization of the Petroleum Exporting Countries has yet to reach an agreement with Russian, in regards to its plan to increase worldwide crude oil production cutbacks by 1.5 million barrels a day. According to Reuters, Russian sources have assured the country´s position will remain unchanged and that it´s prepared to face lower oil prices. In response to this, OPEC ministers have doubled down by letting Moscow know that if Russia does not carry out production cutbacks, it will completely eliminate its already existing cutbacks (2.1 million barrels per day), which would make international prices collapse.