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Financial Regulation: Weekly Upadate. 5 April 2019

April 5, 2019
Highlights: ESAs issue report on risk and vulnerabilities. EBA issues clarifications for API under PSD2 and risk dashboard. ESMA launches CCP stress test. OJEU publishes equivalence decisions. BdE issues supervision report. CNMV issues Brexit information. FRB issues final rule on intraday credit to FBOs. US Agencies propose rules to limit impact of large bank failures

Market Comment | Markets remain cautiously optimistic on US-China trade deal hopes

April 5, 2019
Financial markets were little changed awaiting further details on US-China trade talks, which are currently underway. The US is mulling over giving China until 2025 to fulfill its trade promise, which includes a commitment to purchase more US agricultural products, among others. Ongoing talks are expected to pave the way for Trump and Xi to seal a trade deal.

Market Comment | Optimism on trade and growth outlook boosted financial markets

April 4, 2019
There is a positive tone in the financial markets on the back of trade optimism and improvement in China’s growth outlook. Both equity and sovereign bond yields increased across the board, suggesting a decline in global risk premium.

Geo-World: Conflict & Protest - March 2019

April 4, 2019
U.S. led forces have captured the last pocket of ISIS in Syria. In Venezuela, Russian material involvement could trigger more regional risks. In Asia, U.S. pressure on North Korea continues. In Algeria, instability continued during the month and led the president Bouteflika to step down his mandate. Social unrest should ease off from now on.

Turkey | Inflation in line with expectations

April 3, 2019
Consumer prices increased by 1.03% in March in line with expectations (1%, Consensus & BBVA Research), resulting in a steady annual inflation at 19.7%. Assuming no additional shock, we still expect consumer inflation to stay between 19-20% till June, when favorable base effects will start to weigh and end the year at 14.5%.

Spain | Interdependence and regional sensitivity to national and global shocks

April 3, 2019
This paper quantifies and analyses the interrelationship between the economic activity (GDP) of each Spanish region in response to the variation in economic activity of the remaining regions and to oil price shocks. The regional GVAR model developed offers great potential for many lines of analysis and the monitoring and projection of regional economic activity.

Peru | New home and prime office market in Lima Metropolitana

April 3, 2019
Sales of new apartments in Lima continued to recover in 2018 in a context of improved formal employment, attractive interest rates, and some government incentives. We estimate that sales improvement will keep consolidating this year. On the prime office market side, the supply of previous years is gradually being digested and this will still continue in 2019.

Market Comment | Investors took a breather after starting this week on a positive note

April 3, 2019
Financial markets remained broadly steady. Investors took a breather today after starting this week on a positive note, encouraged by positive PMI data surprises from the US and China, more accommodative central bank policy and cautious optimism towards a US-China trade deal.

Spain | Employment lost some traction in Q1, despite strong performance in March

April 3, 2019
Social security registrations increased by 155,100 people (2.9% compared to March 2018) and unemployment decreased by 34,000 people (-4.9% compared to one year ago). Taking favourable seasonality out of the equation, the number of people in employment grew by 50,000 and the unemployment rate fell by 10,000.

DiGiX 2018: A Multidimensional Index of Digitization

April 2, 2019
DiGiX is a composite index that measures the degree of digitization in 99 countries around the world. It classifies information into three broad categories, supply conditions, demand conditions, and institutional environment.

The Spanish productivity puzzle

April 2, 2019
The long-term prosperity of a society is dependent on its productivity—in other words, its capacity to increase the quantity of goods and services produced per unit of labor input. GDP per person of working age can be calculated by simply multiplying the activity rate by the employment rate for the active population and by productivity.

Market Comment | Markets start the week on front foot amid positive data surprises

April 2, 2019
Optimism in the markets at the beginning of the week after a positive surprise in the confidence indicators from China and the US. In addition, trade optimism remains as trade talks between the US and China will continue this week. Finally, U.S. employment data, alongside developments on the Brexit, will catch the market’s attention.

Presentation of Canary Islands Economic Outlook 2019

April 2, 2019
The economy of the Canary Islands grew by 2.5% in 2018; further growth of 2.4% is expected in 2019 followed by slower growth of 1.8% in 2020, giving seven consecutive years of economic recovery. 47,000 jobs will be created on the islands between the end of 2018 and 2020, but the unemployment rate will stand at 18.6% in 2020.

Presentation Extremadura Economic Outlook 2019

April 2, 2019
The GDP of Extremadura grew by 2.6% in 2018, exceeding 2017 growth by 0.5 percentage points, and is expected to increase by 2.4% in 2019 and by 1.9% in 2020. As a result, the creation of 13 thousand jobs is expected during 2019–2020, and the unemployment rate is expected to fall to 21.2% in 2020, still 5.8 percentage points above the 2007 minimum.

Colombia | Good news regarding inflation at the start of the year

April 2, 2019
The inflation figures for February were good. Monthly inflation stood at 0.57% with annual inflation at 3.01%, the lowest since August 2014. Analysts and economists were expecting a higher monthly figure and this meant that the good news provided even greater optimism.

Presentation of Balearic Islands Economic Outlook 2019

April 2, 2019
The economy of the Balearic Islands grew by 2.4% in 2018; further growth of 2.2% is expected in 2019 followed by slower growth of 1.7% in 2020, giving a total of seven consecutive years of economic recovery with an average growth of 2.8% per annum. The islands will create 33,000 jobs between the end of 2018 and 2020 and the unemployment rate will drop to 9.5%.

U.S. Recession Risk Monitor. March 2019

March 30, 2019
Models suggest more than 50% probability of recession within the next 24 months. Global, housing and business debt represent major red flags. Fed’s strong dovish bias a response to risks. Markets digesting the balance between weaker outlook vs. lower expected interest rates. Economic fundamentals for households and financial institutions remain solid.

Mexico | Traditional bank deposits moderate their performance

March 30, 2019
In January 2019 the nominal annual growth rate of traditional deposits (demand + term) of commercial banks was 7.8% (3.3% real), similar to the previous month (7.9%) and lower than the nominal growth rate registered in January 2018 (9.0%).

Market Comment | Sovereign yields slid further as global growth concerns aggravated

March 30, 2019
Financial markets remained under pressure this week amid mounting concerns over global economic outlook. A spate of weaker economic data, dovish central bank rhetoric, combined with uncertainty surrounding US-China trade talks and Brexit dragged heavily on global bond yields.

The recovery of the Spanish economy and the challenges ahead

March 30, 2019
After an unprecedented crisis, Spain has overtaken pre-crisis levels of income per capita due to a favorable combination of external and domestic factors. Although it is difficult to estimate their exact contribution, behind the current economic recovery are the effects of structural reforms, in labor and product markets, the financial system and the public sector.

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