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Policy priorities to promote financial development in the context of Middle Income Trap

December 6, 2018
This paper analyses the development of financial markets in Argentina, Colombia, Mexico and Peru in the context of the middle-income trap. This is particularly relevant for these economies, since well-developed and properly-functioning financial markets are fundamental to achieve high income status on a sustainable basis.

Spain | Rise in home prices eases in Q3 2018

December 5, 2018
Home sales grew in September, but at a slower rate. Credit approvals for home purchases nevertheless rose more in October than in previous months. Prices continue to trend upwards, but less sharply in Q3 2018. While building authorizations fell in September, the industry did continue creating jobs.

Mexico | Remittances continue to grow,increasing by 3.4% YoY to US$2.94 billion in October

December 5, 2018
October was the 31st consecutive month of positive year-on-year growth in remittances, with a total of US$2.94 billion being sent to Mexico, representing year-on-year growth of 3.4%.

Market Comment | Optimism in markets after G-20 summit vanished

December 5, 2018
Yesterday’s positive mood in financial markets vanished due to rising doubts on the hold-off on new tariffs between China and the US, which seemed to be shown only as a temporary relief.

Market Comment | US-China trade truce prompted appetite for risk assets

December 4, 2018
Positive tone after the announcement of a trade tariff truce between China and the US at last weekend’s G-20 summit. Additionally, oil prices rebounded ahead of the outcome of Thursday’s OPEC meeting as cuts in oil supply could be implemented. After the tone of last week’s Powell speech, markets will remain focus on data, this week: employment and consumer confidence

Turkey | Inflation surprised on the downside

December 4, 2018
CPI fell by 1.44% in November, lower than (consensus -0.3% vs. BBVA-Research estimates 0.1%). Annual CPI declined to 21.6% from 25.2% in October. Reversal of discount campaigns, tax incentives and unfavorable base effects could bring a transitory increase in CPI in 1Q19; but given the recent supportive external financial conditions, risks are cumulating on the downside.

The outlook for oil prices

December 3, 2018
It has become common to see spikes in oil prices. Since October the price of Brent crude has fallen by 30% to around US$59 per barrel, its lowest level since October last year.

Employment and productivity in the digital age

December 3, 2018
Since the invention of the steam engine at the end of the eighteenth century, technological innovation has been the main source of growth in developed economies. In particular, it is the key reason why today’s average Spanish worker earns eight times as much as at the beginning of the twentieth century, for one third fewer hours.

China | Trump-Xi meeting declares a trade war truce, paving way for further talks

December 3, 2018
The US-China relationship seems to get a favourable turn after a highly anticipated dinner on last Saturday between Trump and Xi on the sidelines of the G20 summit in Argentina. In particular, both sides agreed to keep the trade war from escalating with a promise to halt the imposition of new tariffs for 90 days and intensify their negotiations in the following months.

Mexico | Five social & labour programmes from the 2nd consultation would cost 0.85% of GDP

December 1, 2018
Although the consultation indicates that the new refinery in Dos Bocas will cost 50 billion pesos (0.22% of GDP), we consider that it refers only to the first stage, since the incoming Secretary of Energy, Rocío Nahle, estimated that it would cost 160 billion pesos (0.69% of GDP) and would be completed in 3 years.

Market Comment | Powell’s speech and FOMC minutes drove financial markets in the week

December 1, 2018
Events in the US drove financial markets during the week as the comments of Powell and the release of the latest FOMC minutes posed some doubts about the pace of Fed tightening in 2019. The Brexit negotiation process and Italy’s budget were also in the spotlight, while geopolitical tensions in Russia increased ahead of the G-20 meeting.

Financial Regulation: Weekly Update. 30 November 2018

December 1, 2018
Highlights: BCBS and FSB issue reports on implementation of latest reforms and recommend adopting agreed requirements (e.g. NSFR, TLAC or large exposures). EC issues progress reports on Banking Union, NPLs and CMU. ECB clarifies materiality threshold for credit obligations past due. FRB, BoE and ECB publish financial stability reports. ESAs issue RTS preparing for Brexit.

Market Comment | US yields and USD declined after Powell’s comments

November 30, 2018
Financial markets in cautious mode, with investors waiting for today’s release of FOMC minutes after yesterday's comments by Powell, which had a significant impact on US markets. The release of estimates of the impact of Brexit by the Bank of England and other institutions also focused the market’s attention in a day that saw plenty of economic indicators.

Mexico | Traditional bank deposits moderate their performance

November 29, 2018
In September 2018, the nominal annual growth rate of traditional deposits (demand + term) of commercial banks was 8.8% (3.6% real), lower than the previous month (11.5%) and also than the nominal growth rate registered in September 2017 (10.8%).

Mexico | Stable debt to GDP ratio in 2019 with a minimum primary surplus of 0.5% of GDP

November 29, 2018
The stabilization of public debt as a share of GDP is one of the goals that the incoming federal public administration has set out to reach. Keeping the historical balance of PSBR stable around 46.5% of GDP in 2019, ceteris paribus, will be possible if the federal government achieves a minimum primary surplus of 0.5% of GDP.

Market Comment | US dollar fell after Powell's speech

November 29, 2018
Fed Chairman Powell’s speech drove the USD to depreciate after markets read his speech as “dovish”. He said that interest rates are “just below” neutral levels. In another front, financial markets remained calm awaiting the outcome of the Xi-Trump’s meeting at the G-20 summit.

Mexico | Business loans continue to be the main source of bank credit expansion

November 28, 2018
In September 2018, the nominal annual growth rate of the balance of the current loan portfolio granted by commercial banks to the private sector was 11.2% (5.9% real). This rate was equal to the previous month and lower than the same month of 2017 (12.2%).

Market Comment | Increasing trade concerns ahead of G-20 summit

November 28, 2018
Increasing trade fears among investors ahead of Trump-Xi meeting at the G-20 summit as US President Trump threatened to go further with tariffs on Chinese imports unless China opens its markets to competition from US companies.

Banking Outlook. November 2018

November 27, 2018
Net profit in the first half of 2018 was 6,654 million euros compared with losses of 6,170 million in the first semester of 2017, period in which the resolution of Popular had an impact. Defaulting within the system as well as the deleveraging of the private sector continues. The system’s efficiency and profitability improved in the first half of the year compared to 2017.

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

November 27, 2018
Among the various types of risk that the financial system is currently facing is that of cyber-attacks. The national producer price index for the construction sector increased by 8.1% in the third quarter of 2018, but we expect that at year-end 2019 the increase will have slowed to below 5% on an annual basis.