Global | Summer developments leave (almost) everything unchanged

Summary

The trade agreement between the U.S. and the EU confirmed an already anticipated increase in tariffs, with a limited impact on Spain. Economic activity and inflation remain stable, markets show resilience, and monetary policy in the euro area consolidates without further rate cuts.

Key points

• Key points:
• The U.S. tariff hike on European products will negatively affect Spanish exports, although in a contained manner, given the low weight of bilateral trade and is in line with assumptions already incorporated in BBVA Research’s scenario.
• The global economy continues to show weak growth without signs of inflationary pressures. In Spain, employment data suggest that third-quarter activity growth will be similar to the one in the previous quarter, with inflation aligned with the ECB’s target.
• Financial markets reflect moderate effects: volatility has decreased, equities have regained positive returns for the year, and central banks have confirmed that rates in the euro area have reached their floor, while in the U.S. they could fall sooner than expected.
• Uncertainty remains due to the volatility of U.S. trade policy and the sustainability of fiscal policies. Rising long-term interest rates may constrain monetary stimulus amid doubts over public finances.

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