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Financial Markets & Global Risk Aversion
The focus of markets seems to have switched from the fears to the FED’s tapering to more idiosyncratic factors.
The spillovers of the Ukraine and Russian crisis have been minor so far and highly concentrated in EM Europe.
The correction of Emerging Markets assets is still alive but already in the undershooting phase. However, some countries are more penalized by local factors.
Sovereign Markets & Ratings Update
The downward trend in risk premia of most developed markets have continued.
The reversal in the EU periphery´s credit rating cycle seems to be confirmed by the upgrades of Ireland and Spain by Moody’s.
The decoupling of rating cycles between different emerging regions continues.
Our own country risk assessment
An increasing discrimination by both markets and rating agencies is being supported by a higher role of idiosyncratic factors in the risk assessment.
New risks scenarios have emerged from the Ukrainian-Russia situation.
Our Early Warning System does not signal an excess of credit in Emerging Markets although some isolated cases should be monitored (i.e. China).