Financial stress latest publications
Global Risk Aversion experienced high volatility during the quarter, which was reflected mainly in equity markets, but not in sovereign CDS or emerging currencies markets. The improvement seen since the beginning of the year was favoured by the Fed's announcement of a more patient stance in its interest rate policy.
The bet of financial markets on ratings downgrades remain for countries where agencies have already taken recent actions (Argentina, Italy, Turkey). A bias towards a slower Fed's normalization process is supportive for EM ratings; however, protectionism (and its impact on China) is the main risk ahead for EM assets
Average growth in Latin America has been hindered in 2018 (0.9%) by the recession in Argentina, although it will recover in 2019 (1.8%) and 2020 (2.6%). The region presents highly diverse economic perspectives, with crisis in Argentina, uncertainty in Brazil and resilience in the Pacific Alliance.
The increased synchronization and depreciation of Emerging Market's currencies due to both Fed normalization process and, in some cases, idiosyncratic vulnerabilities uprise, have not become a full sell-off across geographies and assets. Beyond markets ups and downs, the resumed leverage trend is a concern for some countrie…
Latin America will grow 1.3% in 2018 and 2.1% in 2019, with considerable heterogeneity across countries. These forecasts are lower than the previous ones, mainly due to the revision of growth in Argentina and Brazil. This adjustment in the two countries could not be compensated by the upward revisions of growth in Mexico, C…
Growth prospects deteriorate due to the financial volatility, the negative effects of exchange rate depreciation, doubts about whether the next government will face fiscal problems and the consequences of the recent truckers’ strike, among other factors. Thus the recovery process will be more gradual than expected
During May we have seen the first overall increase in CDS spreads since Nov-2016. However, the recent turmoil in EMs has merely impacted on Global Risk Aversion (GRA). Our newly developed indicator of EM FX synchronization indicates that the recent depreciation in EM FX rates has had a relatively low level of synchronizatio…
Desde el comienzo de la crisis global la evolución de las “tensiones” en los mercados financieros de distintas regiones ha sido similar