The Day at a Glance | September 29 2021

The Top

*Fears of persistent inflation at a global level increase.

*Janet Yellen assures members of Congress that the US government will run out of funds to handle financial obligations on October 18th.

*PEMEX`s crude oil production decreased (-) 2.6% during August after fires on the Ku-Maloob-Zaap platforms.

*Fitch Ratings cuts Evergrande`s debt rating to a level above default; today is the deadline for a 45.2 million dollar interest payment.

*China considers increasing electricity prices in order to incentivize greater production and less consumption, which would solve issues with supply.

Economic environment

Concerns of persistent inflation increase. According to a report published by IHS Markit, the crisis among production chains has become worse due to the economic recovery`s speed, scarcity of labor and overload among transportation systems. This has increased the likelihood of supply chains disruptions extending through the end of 2022 or even 2023. The immediate repercussion is persistent inflation, with firm increases in consumable and commodity prices due to low inventory levels and growing transportation costs. Additionally, China`s energy supply problems could increase pressures since the world`s main manufacturing center`s production has been intermittent because of issues with the supply of electricity in recent months. In the United States, Executive Director of the Port of Long Beach, Mario Cordero, assured that the transportation crisis could become worse at the end of the year holiday season, during which purchases will increase. Problems in production chains entail greater costs of production, which will decrease companies` profit margins. In order to compensate for this, it`s possible that consumer prices will increase and inflationary pressures will remain in place in 2022. In addition to this, energy prices are also increasing, which could extend through winter due to growing demand during the seasonal period.