The Day at a Glance | November 24 2020

The Top

· Inflation slows down in Mexico.

· Biden choses Janet Yellen for Treasury Secretary.

· Economic indicators: Unemployment in Mexico falls more than expected (4.7% vs 5% e.).

Economic environment

Mexico`s Consumer Price Index recorded a larger than estimated increase during the first half of November. Growth was barely 0.04% biweekly, figure wav below estimates (0.24% e.), which triggered a fall in the annual rate of inflation to 3.43%. The downwards pressures came from contractions in prices of goods (-0.3% biweekly; nonfood -0.69%) and agricultural goods (-0.94%; fruits and vegetables -3.28%). The contraction in prices of goods combined with very moderate increases in services prices (0.1%) contributed to a negative rate of underlying inflation for the first half of November (-0.11%) and a slowdown to 3.68% annual. Energy prices once again increased the most (2.39%). If this trend continues throughout the rest of the month, Mexico`s Central Bank will open its doors to interest rates cuts once 2021 begins. However, the risk of a more pronounced global economic slowdown, which could cause a financial shock, remains as a factor that could delay this decision.

President elect Joe Biden will most likely nominate ex Chair of the Fed Janet Yellen as the head of the Treasury Department. Yellen, who is 74 years old, is an expert in economics and the labor market, would be responsible of boosting the country out of one of its greatest crises in its history; this time as the fiscal policy leader. This is a historical decision since, if she is approved by the Senate, she would be the first woman to take charge as Secretary of the Treasury. Markets have received this news in a positive way as her nomination implies that other more radical candidates, such as Senator Elizabeth Warren, will not have the opportunity to implement stricter regulatory and fiscal policies. In fact, Yellen`s nomination is seen as something favorable for markets since it`s considered betting on a fast economic recovery through greater fiscal stimuli. Additionally, it`s expected that under her leadership the Treasury will contribute to the implementation of progressive policies to reduce inequality and tackle climate change. The nomination is not yet official but it has been disclosed by Democrats close to Biden`s campaign. The transition of power in the US has formally begun after President Trump admitted yesterday that the process must start; once the General Services Administration (GSA) recognized Biden`s victory and requested the process to begin.