The Day at a Glance | May 30 2022

The Top

*No agreements in Europe to implement an embargo on Russian oil.

*Chinese authorities ease restrictions in Shanghai and Peking in light of a decrease in COVID-19 cases in both cities.

*Inflation in Germany (8.7% annual vs 8.1%e.) and Spain (8.5% vs 8.3%e.) surprised to the upside in May.

*Phillip Lane, Chief Economist of the ECB, considers that gradual, 25bp increases in July and September are the ideal pace for monetary normalization.

Economic environment

No agreements reached in Europe. In a meeting between EU ambassadors – prior to the meeting held between European Heads of State – no agreement was reached regarding the implementation of a ban on Russian oil as part of a series of sanctions due to the country`s invasion of Ukraine. Hungary opposed the idea despite the fact that the rest of the member countries had proposed it could be exempt  and, therefore, could guarantee its supply of oil. According to recent reports, negotiations will continue in the following days and will be one of the main points in the European Summit held in Brussels, which kicks off today. The European Commission proposed halting oil imports from Russia by sea starting in 2023 and later implementing restrictions on imports carried out through pipelines, in efforts to reduce Europe`s dependency on Russian oil. All EU member countries must back the proposal in order for it to be implemented, however, several have expressed disagreement and negotiations have not led to concrete results. Germany and Poland have committed to reducing oil imports from Russia regardless of any decision that reached in the European Union.

COVID-19 in China. On Sunday, China recorded its lowest number of COVID-19 cases in almost 3 months, which encouraged authorities to lift some restrictions in Shanghai and Peking. Mobility restrictions were eased on Monday in the country`s capital, Peking, after authorities confirmed that the outbreak was under control. Public transportation services will resume in three of the city`s districts and malls will be reopened, although for a limited number of people. In Shanghai, strict  mobility restrictions in public spaces will be lifted starting on June 1st – in addition to economic stimulus worth approximately 21 billion dollars in order to boost the city`s recovery. This news has increased optimism with respect the China`s return to normalcy, which is essential for growth and production chains at a global level.