In October, we argued that Mexico was not yet out of the woods, due to a still sizable probability of policy mistake. And this despite its rather favorable economic environment and a cycle driven by strong U.S. activity. Yet once again, policy choices weighed significantly on financial conditions. The cancellation of a USD13.3bn airport project – which had started three years ago and had already issued bonds – after a hasty referendum with very low participation was a blow to market confidence. Since a recent high in mid-October, the Mexican peso (MXN) has depreciated by -6% and crossed USD1=MXN20 for the first time since July while the stock market has lost -4%. The political decision decreases further the likelihood of the implementation of president AMLO’s social spending agenda as public finances should bear the brunt of the cancellation. Should AMLO’s nationalistic stance on the oil sector lead to restrictions on future investment, markets could definitely turn their back on his administration’s policies, curbing growth prospects.