• Calm in financial markets after yesterday’s stocks rally due to US mid-term elections and ahead of today’s FOMC meeting in which no changes are expected. Nonetheless, the Fed is likely to reaffirm its message of progressive tightening (next rate hike is expected in December). Moreover, the positive trade data in China have eased trade fears with the US ahead of Xi-Trump talks at the G-20 meeting at the end of this month.
  • Equity markets trimmed early gains: US and European stocks showed timid losses, however Asian equity indices rose following yesterday’s rally in stock markets. Chinese stocks recovered somewhat also favoured by the release of China’s October export data which were above expectations, despite trade disputes with the US.
  • Core yields remained little changed: the US Treasury 10Y yield continued to hover around 3.20% while the release of export data in Germany, which dropped more than expected, had a muted effect on the 10Y Bund yield (currently steady around 0.45%).
  • Volatility of Italy’s risk premium continued ahead of next week’s submission of Italy’s revised 2019 budget plan. In this context, today the European Commission announced a cut in its forecast for the Italian economy’s growth, fuelling Italy’s 10Y yield and widening its risk premium.
  • In FX markets, the USD recovered from yesterday’s depreciation, and the euro depreciated slightly after Draghi showed concerns about global trade tensions. Meanwhile, EM currencies were mixed, with the TRY underperforming other EM currencies. The drop in crude oil prices weighed on most Latam currencies.

This document was prepared by Banco Bilbao Vizcaya Argentaria’s (BBVA) Research Department on behalf of itself and its affiliated companies (each a BBVA Group Company) for distribution in the United States and the rest of the world and is provided for information purposes only. The information, opinions, estimates and forecasts contained herein refer to that specific date and are subject to changes without notice due to market fluctuations. The information, opinions, estimates and forecasts contained in this document have been gathered or obtained from public sources believed to be correct by the Company concerning their accuracy, completeness, and/or correctness. This document is not an offer to sell or a solicitation to acquire or dispose of an interest in securities.

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