The Day at a Glance | May 20 2021

The Top

*Oil prices drop 6.5% in two days in light of expectations of a nuclear pact with Iran and a still uncertain outlook regarding demand.

*Some members of the FED would be willing to discuss a decrease in the asset purchasing program in the following meetings, according to the meeting minutes.

*The peso`s appreciation prevented Banxico from recording high enough figures to transfer operational remnants to the federal government in the 2020 fiscal period.

*S&P withdraws investment grade for Colombian debt after it failed to approve a reform that would reduce its deficit.

*Japanese exports increased at an annual rate of 38% in April; they point to a firm recovery in global trade.

Economic environment

Iran`s President, Hassan Rouhani, assured that the major global powers have accepted withdrawing sanctions on the country. Iran is carrying out negotiations in Vienna with the United States and Europe to re-negotiate an agreement that will halt projects for the development of nuclear weapons in Iran. In recent statements, the President of Iran confirmed that there is a consensus to withdraw sanctions that have been placed on Iran, including restrictions on the banking sector, the trade of goods, and oil exports. Rouhani assured that details and specific stipulations of the agreement are still being discussed, but that there is already an agreement to withdraw said sanctions. EU representatives confirmed Rouhani`s statements by affirming that they are sure that a final agreement will be reached soon. The news has negatively impacted oil prices in the last two days (WTI -6.5%; Brent -5.2%), as a new nuclear pact would allow Iran to increase oil exports to the global market. The expectation forecasts that Iran could increase production from 2.4 million daily barrels to 4 million in a matter of months and that Washington would allow it to export up to 500 thousand daily barrels halfway through the 3Q21. As Iran meets its commitments in the nuclear pact, exports could increase.