Financial Markets latest publications
After having seemingly vanished as a source of concern for many years, the fear of inflation has re-emerged, along with the first green shoots of recovery.
Bank credit to the private sector fell 7.9% in March due to the performance of the consumer and business portfolios, while demand deposits continued to drive bank deposits.
The tables have recently turned for the common European currency as it once again moves toward appreciation. Following the period of weakness it experienced earlier this year, the euro has appreciated by over 3.5% so far this quarter, exceeding 1.22. This appreciation occurred earlier than expected.
May 28, 2021
US | Are asset prices misaligned from macro fundamentals, and if so, what does that imply?
The quick and strong increase in asset prices after the Covid-19 shutdown has raised concerns about potential bubbles. An inquiry into the historical alignment of equities, investment-grade corporate bonds, and home prices to broad macroeconomic metrics finds overvaluation in the equities asset class.
The banking system has maintained outstanding capital and liquidity levels, which up to now have allowed it to face the adverse effects associated with the pandemic.
The global economy keeps recovering in spite of the uncertain epidemiological context. World GDP growth should be 5.9% in 2021. The worsening health situation slows down economic activity in Uruguay, which will grow less than expected in 2021.
The 2020 banking dynamics of lower credit granted to the private sector and a sharp increase in banking deposits were among the causes of better financing conditions for the banking system and a higher solvency.
After falling 9.9% in 2020, the economy is recovering faster than expected. Nevertheless, the rebound is heterogeneous across sectors. The health situation remains challenging, in a 2021 also marked by the mid-term elections in October.