The mandate of MORENA and the risk premium

The left-wing MORENA party and its allies won by a landslide. They won the presidency by a 31 percentage point margin over the opposition, making Claudia Sheinbaum the president-elect. The poll of polls by Oraculus.com, a poll aggregator, had the margin at 22% going into election day. MORENA and allies are likely to win the supermajority in Congress that is needed to change the constitution, and they likely won seven of the nine gubernatorial elections. Even if the ruling coalition is a handful of seats short of the 85 seats in the Senate or the 334 seats in the Chamber of Deputies needed for a two-thirds majority, it can still "persuade" some opposition congressmen to join it, because of the mandate given to Claudia Sheinbaum. Going forward, the political risk premium will increase if President AMLO passes his 20-point agenda, which includes weakening the INE, eliminating independent regulators and taking control of the Supreme Court, and approving anti-market constitutional changes in the electricity sector. However, the risk premium will compress and the MXN will rally if AMLO does not use his new supermajority in Congress to pass new constitutional changes, and if President-elect Claudia Sheinbaum appoints a pragmatic cabinet, appoints qualified members to Banxico's board, announces a tax reform to increase tax revenues, and opts for a drastic reduction in the budget deficit in 2025.