The Day at a Glance | September 10 2020

The Top

· ECB leaves interest rates and asset purchasing programs unchanged.

· Republicans will vote on a scaled back fiscal package in the Senate today.

· PEMEX could look for funding in local markets instead of international ones.

· Foreign exchange earnings from tourism in Mexico remain at 78.5% below what was observed in July of 2019.

Economic environment

The European Central Bank (ECB) maintained its monetary policy stance unchanged. In its September meeting, the ECB decided to keep interest rates unchanged and the asset purchasing program at current levels (1.35 trillion euros), in addition to reiterating its commitment of doing whatever is necessary to meet inflation targets and maintaining an aggressive stimulus for a longer period of time. In a press conference, President of the ECB Christine Lagarde assured that it`s highly likely they will use all available resources for its asset purchasing program. The bank also presented new macroeconomic estimates – which will be made public throughout the day – with two possible scenarios given the general environment`s uncertainty. Forecasts regarding inflation had no relevant changes, with underlying inflation being adjusted upwards for 2022, according to Lagarde. Lastly, Lagarde commented that the ECB has discussed the Euro`s recent appreciation, but has agreed not to overreact as its objective is inflation and not the exchange rate. The Euro showed gains against the dollar after the news. Markets are still waiting for a 500 billion euro increase in the asset purchasing program unveiled because of the pandemic, other than an extension in its duration until the end of 2021. Recent negative figures for inflation, the halt in recovery seen in August and new outbreaks of the virus in the region all maintain expectations of seeing further actions from the ECB.