Volatility risks continue in the face of the third wave of Covid – El Financiero

Despite advances in vaccination worldwide, the main risk to the global and national economic environment remains the control of the COVID-19 pandemic and the new waves and strains of the virus emerging around the world.

Therefore, it will be necessary to be fully aware of its path, as well as the rhythm of production and distribution of vaccines and the development of new treatments.

There is a risk that the infection will re-emerge and that new interruptions in economic activity will continue into 2021 and part of 2022.

The Centers for Disease Control (CDC) reports that the delta variant already accounts for 83 percent of recent coronavirus cases in the United States, up from the 50 percent reported two weeks ago, and now affecting young adults, in Mexico to those Those under the age of 52. Years old did not receive the vaccine.

Some European countries have announced new restrictions and partial closures of activities.

All this environment generates a state of uncertainty and maintains the possibility of turbulence in the international financial markets and there may be adjustments in capital flows, linked to the realization of a growing inflationary bubble and the application of tapering, which was commented on in the previous column, which is the beginning of the government’s withdrawal to pump liquidity in the economy.

In this context, increased volatility and instability in financial markets may delay economic recovery or even cause a further contraction in activity levels.

High volatility and risk aversion, in turn, can lead to additional portfolio adjustments towards lower-risk assets, which means capital outflows from emerging countries and a strengthening dollar.

In Asia, where the Covid virus arrived before anywhere else, they are already beginning to make cuts in estimates of growth in the economy.

The Asian Development Bank (ADB) cut India’s economic growth forecast for 2021 to 10 percent, from the 11 percent projected in April, due to the negative impact of the coronavirus pandemic.

Regarding China, the same bank estimates that expansion is expected at 8.1% in 2021 and 5.5% in 2022.

In South Asia, the Asian Development Bank said the economic outlook for the sub-region is clouded by new waves of COVID-19 that will affect the sub-region from March to June 2021.

If the contagion continues to rise in North America, analysts will surely adjust growth forecasts downward, which will undoubtedly affect negatively the markets, which have shown volatility in recent days.

Given this scenario, as a good man from Monterrey, it is necessary to continue saving to invest, reduce risk through diversification, and include financial instruments whose return is equal to or greater than inflation.

The Dow sees an annual return of 12.76 percent, the S&P 500 gain of 15.10, while the Nasdaq is up about 12.5 percent in 2021.

In Mexico, the Index of Prices and Quotes (IPC) of the Mexican Stock Exchange registered an advance of 11.78 percent in 2021.

Of course, these latter options carry certain risks, so strategies and options must be carefully analyzed.

Por cierto, el rendimiento de los Bonos a 10 años de Alemania se ubica en (-0.41) por ciento, (tasas negativas, significa que los inversionistas le pagan al gobierno por 10 años, por el privilegio de tener su dine univo res Certain). In the US, the 10-year Treasury yield is 1.21%. In Mexico, the yield on the 10-year M bond is 6.88%.

Until next time!