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Financial Regulation: Weekly Update. 28 September 2018

September 28, 2018
Highlights: TCFD issues first status report. EBA launches 2018 EU-wide transparency exercise. ECB issues guide for on-site inspections and internal models investigations. ESMA issues RST on clearing obligations for intragroup transactions. PRA issues report on financial risks from climate change. US Agencies amend swap margin rule.

U.S. | FOMC raises rate for third time this year, poised for fourth in December

September 27, 2018
As we expected, the FOMC raised its benchmark rate for the third time this year. Markets reacted little to the widely anticipated 25bp increase, with 10-year treasury yields down a bit and equity prices up slightly.

U.S. | What’s happening with U.S. potential GDP growth?

September 27, 2018
Capital stock, labor, and productivity do not show a significant increase following the recent fiscal stimulus. According to our forecast, potential output will grow 1.8% per year on average for the next 10 years. Potential GDP growth reached its peak in 2017, and thus monetary policy normalization is adequate.

Stable Sentiment towards Financial Vulnerabilities - 3Q18

September 26, 2018
The China Vulnerability Sentiment Index remained stable through Q3 despite the escalated trade disputes with the US and growth slowdown. By component, the SOE index recovered. Both Housing Bubble index and Shadow banking index still held well. However, the Exchange Rate Index plummeted before recovered on the central bank’s revealed efforts to stabilize the exchange rate.

U.S. | Just what the doctor ordered: real-time recession forecasts

September 25, 2018
Highly predictive financial and economic factors suggest recession risk remains low. However, these indicators are trending towards pre-recession peaks, implying a recession could happen around 2020.

Mexico | Dynamism of term deposits boosts growth in traditional bank deposits

September 25, 2018
In July 2018, the nominal annual growth rate of traditional deposits (demand + term) of commercial banks was 10% (4.9% real). The growth rate in July was lower than in the previous month (11.8%) and was also lower than the growth rate in the same month of 2017 (10.5%).

Mexico | Trade agreement with the United States: investment framework to be maintained

September 25, 2018
On 27 August, Mexico and the US announced that they had reached an understanding allowing them to sign a trade agreement to replace the North American Free Trade Agreement (NAFTA). Although we are still awaiting the final text in order to offer our full assessment, on the basis of the announcement made by the negotiating teams, we can give a preliminary analysis.

Global Economic Risk Outlook. Third quarter 2018

September 24, 2018
This report analyzes the main global economic risk events that could generate a sizable deviation from our baseline scenario. Among them, a full-on trade war, US recession, Fed exit strategy and disorderly deleveraging in China stand out. Although these are usually events of low probability, their feasibility and adverse effects may be large enough to require monitoring.

Mexico-US Trade Agreement: Uncertainty diminishes

September 24, 2018
At the end of August Mexico and the US announced a preliminary agreement intended to replace the North America Free Trade Agreement (NAFTA) signed in 1994. The most significant changes in the agreement announced are centred on the automotive sector. And this is hardly surprising, given that the sector accounts for the entire trade deficit that the US runs with Mexico.

Are cryptocurrencies dying?

September 24, 2018
It is no secret that 2018 is proving to be a difficult year for the value of cryptocurrencies. After reaching a maximum historic value at the beginning of January, with an aggregate theoretical market value of $814,000 million, the price of almost all of them has collapsed, losing up to 75% of their maximum level. Are we facing the end of cryptocurrencies?

Financial Regulation: Weekly Update. 21 September 2018

September 21, 2018
Highlights: IOSCO issues guidance on conflicts of interest and conduct risk in capital raising and policy to protect some OTC derivatives investors. EBA issues report on funding plans and asset encumbrance. ECB issues report on profitability drivers and consults on the evaluation of licence applications. US Agencies consult on the treatment of HVCRE exposures.

Mexico | Monthly Report on Banking and the Financial System. September 2018

September 21, 2018
Reduced absorption of financial resources by the public sector has contributed to relieving pressure on markets for funds available for lending in Mexico. The mortgage lending market in the next few years. Limited contagion from the Turkish crisis. CNBV publishes secondary regulations for the FinTech Law.

Turkey | A more realistic New Economic Program

September 21, 2018
Turkey’s New Economic Program (NEP) hinders a re-balancing of the economy with fiscal consolidation in the short term in a more realistic framework.The NEP is more consistent with expectations. The prudent stance of the fiscal policy is now more adequate and should complement the already tight monetary policy conditions to re-balance the economy.