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  • US Crude Stocks Fall More than Expected
    US crude oil inventories dropped by 1.662 million barrels in the May 21st week, following a 1.321 million increase in the previous period and compared with market forecasts of a 1.05 million fall, data from the EIA Petroleum Status Report showed. Meantime, gasoline inventories dropped by 1.745 million barrels, following a 1.963 million decrease in the prior week and compared with consensus of a 0.614 million decline.
  • Kenya Holds Key Interest Rate Steady at 7%
    The central bank of Kenya kept its benchmark interest rate unchanged at 7% during its May meeting, saying the current accommodative monetary policy stance remains appropriate. Inflation remains well anchored and it is expected to remain within the target range in the near term, supported by lower food prices and muted demand pressures, despite the recent increase in fuel prices. The MPC added that will closely monitor the impact of the policy measures, as well as developments in the global and domestic economy, and stands ready to take additional measures as necessary.

 

Brazil Posts Record Current Account Surplus
Brazil’s current account surplus widened sharply to a record USD 5.66 billion in April of 2021, from a downwardly revised USD 0.2 billion in the same month of the previous year. Figures compare with market expectations of a USD 6.2 billion surplus. The goods account surplus rose significantly to USD 9.15 billion from USD 4.88 billion a year earlier, while the primary income gap shrank to USD 2.37 billion from USD 3.80 billion. Nevertheless, these improvements were partially offset by an expansion in the services account deficit to USD 1.31 billion from USD 1.10 billion, and a reduction in the secondary income surplus to USD 0.20 billion from USD 0.23 billion in the same period of 2020.

Mexico Economic Activity Unexpectedly Rebounds in March
Economic activity in Mexico advanced 0.8 percent from a year earlier in March of 2021, following a 5.1 percent contraction in the previous month and beating estimates of a 0.2 percent decline. It was the first expansion in economic activity since December of 2019, as Mexico’s industry started to benefit from recovering demand in the US, its largest trading partner. Output rose the most in the secondary sector (1.7 percent vs -4.5 percent in February), followed by primary activities (0.5 percent vs 7.2 percent), and the services sector (0.3 percent vs -5.9 percent). On a seasonally adjusted monthly basis, economic activity went up 2.6 percent, following an upwardly revised 0.6 percent decrease in the prior month.

Mexico Economy Contracts for 8th Straight Quarter
Mexico’s GDP shrank 3.6 percent on year in the first quarter of 2021, an eight consecutive period of contraction and slightly worse than a preliminary estimate of a 3.5 percent fall. Consumer and tourism related sectors continued to suffer amid a resurgence in COVID cases and new lockdowns across the globe, while the Texas freeze in February caused power shortages in the manufacturing hubs of northern and central Mexico. The largest contraction rates were seen at cultural and sports entertainment services, and other recreational services (-44.9 percent), temporary accommodation and food and beverage preparation services (-33.3 percent), and transportation and storage (-12.7 percent). In addition, utilities output dropped 6.1 percent, while construction activity fell 6.8 percent. Mining output also declined 2.7 percent and manufacturing was 0.6 percent lower. On a brighter note, primary activities grew 2.8 percent.

Mexico Q1 GDP Growth Revised Slightly Higher
Mexico’s gross domestic product grew by 0.8 percent on quarter in the three months to March 2021, beating a preliminary estimate of 0.6 percent and following a downwardly revised 3.2 percent expansion in the previous period. It was the slowest pace of economic growth since a recovery began in the third quarter of 2020. The service sector growth slowed to 0.9 percent from 3.2 percent in Q4 2020 on the back of a resurgence in COVID cases and new lockdowns across the globe. In addition, industrial output advanced at a slower 0.5 percent (vs 3.6 percent in Q4) as the Texas freeze in February caused power shortages in the manufacturing hubs of northern and central Mexico. Agriculture activity, however, rebounded 0.7 percent (vs -2.1 percent in Q4). GDP in Latin America’s second-biggest economy plummeted by 8.3 percent last year, the biggest decline in about nine decades.

  • Mortgage Applications Drop as Interest Rates Rise: MBA
    Mortgage applications in the US fell 4.2 percent in the week ending May 21st, the biggest fall in seven weeks as interest rates edged higher, data from the Mortgage Bankers Association showed. Applications to refinance a home loan sank 7.2 percent while purchases increased 1.7 percent. The average fixed 30-year mortgage rate went up by 3 bps to 3.18 percent, the highest in three weeks. “Demand is robust throughout the country, but homebuyers continue to be held back by the lack of homes for sale and rapidly increasing home prices”, said Joel Kan, an MBA economist.

    Sweden Jobless Rate Rises to 9.4% in April
    Sweden’s unemployment rate rose to 9.4 percent in April of 2021 from 8.2 percent in the corresponding month of the previous year. The number of unemployed increased by 71.8 thousand from a year earlier to 521 thousand and employment went up by 3.6 thousand to 5.009 million. The labor force participation rate increased to 73.7 percent, from 72.4 percent a year earlier. Seasonally adjusted, the unemployment rate stood at 9.1 percent.

    10-Year Treasury Yield at 1-Month Low
    The yield on the benchmark US 10-year Treasury note was little changed at 1.56% on Wednesday, close to levels not seen in a month, amid easing inflation fears. Several officials, including Richard Clarida, Lael Brainard, Raphael Bostic and James Bullard, continued to reiterate that most price increases should be temporary and affirmed their support to keep monetary policy accommodative for some time. Still, Clarida added that the Fed may be ready to begin discussing tapering in upcoming meetings, in line with FOMC minutes released early in the month, in another sign that policymakers are closer to debating it. Meanwhile, the $60 billion 2-year note auction attracted strong demand on Tuesday, helping to push bond prices up.
  • French Consumer Morale at 15-Month High
    The consumer confidence in France increased to 97 in May of 2021 from 95 in the previous month, in line with market expectations. It was the highest reading since March of 2020 but remained below its long-term average (100). Expectations for the households financial situation improved to above its long-term average and the share of households considering it is a suitable time to make major purchases remains above its long-term average. Households’ opinion balance related to their future saving capacity has also increased and reached a new all-time high. Also, concerns about unemployment decreased to its lowest since March 2020 (49 from 62) while the share of households considering that the future standard of living in France will improve in the next twelve months rose back above its average level (-26 from -36). Meantime, the share of households considering that prices will be on the rise during the next twelve months increased (-15 from -21).
  • France Business Confidence at 2-1/2-Year High
    The manufacturing climate indicator in France increased to 107 in May of 2021 from 104 in April, beating market forecasts of 106. Confidence among manufacturers increased for the 6th consecutive month to the highest level since September of 2018, staying above pre-pandemic levels and the long-term average of 100. Gains were mainly driven by order books (-10 vs -15), general production expectations (18 vs 3) and personal production expectations (19 vs 12). Price pressures also intensified and the subindex reached levels not seen since 2011 (25 vs 17).

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