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July 2015

Global Daily: S&P downgrades Brazil’s credit rating outlook

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The European Central Bank (ECB) has kept its liquidity lifeline to Greece's banks on hold at just under €91bn.  At a scheduled meeting of the ECB's policy making governing council, the Bank of Greece made no request for additional Emergency Liquidity Assistance, suggesting financial conditions in the country have improved since talks began on a third bailout package.

Global Daily: U.K. GDP growth accelerates in Q2

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In China, the Shanghai Composite index fell by 1.7 per cent on Tuesday after another tumultuous day of trading. The relative stabilization of the Chinese market following the 8.5 percent decline on Monday helped other regional markets settle down - the Japanese Nikkei and Australian bench mark indexes declined by only 0.1 percent, and Hong Kong’s Hang Seng index was up 0.9 percent.

Global Weekly: Implications of negative policy rates and yields in Europe for activity and financial stability

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While negative rates in Europe may help boost lending and exports, they could also have some adverse consequences for financial stability. They may erode bank profitability and may make it harder for pension and life insurance companies to meet their long-term liabilities. Investors may be encouraged to take excessive risk. Finally, if negative rates were to prevail for long, they may lead to operational innovations whose costs may offset the benefits of negative rates.

Global Daily: S&P upgrades Greece’s sovereign credit rating

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The European Central Bank (ECB) raised the limit on Emergency Liquidity Assistance (ELA) to Greek banks by €900 million to almost €91 billion, easing the pressure on Greek lenders that re-opened on Monday for the first time in three weeks.  The ECB’s policy-setting Governing Council had previously set ELA at €89.5 billion.  The move came two days after the Greek government made a €4.2 billion payment to the ECB.

Global Weekly: Implications of Negative Policy Rates for Sovereign Bond Yields in Europe

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Reflecting negative policy rates in several central banks in Europe, nominal yields on some bonds of highly-rated European governments have also dropped below zero. Explanations for the phenomenon of negative yields include very low inflation, further “flight to safety” toward fixed income assets in Europe’s core, and—perhaps the main proximate cause—the increased scarcity of highly-rated sovereign bonds eligible for the European Central Bank’s asset purchase program.

Global Daily: Greece pays off some debts and reopens banks

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Gold prices fell for a six consecutive day on Monday as the U.S. dollar hit a 3-month high against a basket of major currencies amid prospect for higher U.S. interest rates.  The price of the bullion dropped as much as 5.5 percent to a 5-year low of $1,072.35 an ounce in early trading, but is currently trading at $1,105 an ounce, down 2.5 percent.

Global Daily: Canada’s central bank cuts interest rate for second time this year

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Oil prices remained under pressure on Wednesday as U.S. data showed total supplies of crude and petroleum products hit a record high.  Brent, the global benchmark, fell $1.08 (or 1.9 percent) to $57.43 a barrel, while West Texas Intermediate (WTI), the U.S. benchmark, dropped $1.28 (or 2.4 percent) to $51.76 a barrel.  Oil’s rebound from a 6-year low in March has faltered amid the volatility created by the Greek crisis and the collapse of the Chinese equities and speculation that a global supply glut will persist.

Global Daily: U.S. retail sales fall in June

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U.S. equities and Treasuries advanced while the dollar fell after weak U.S. retail sales damped optimism about the strength of the rebound in consumer spending.  The S&P 500 index gained 0.4 percent in early trading, after jumping 1.1 percent on Monday, while the yield on 10-uyear Treasury notes fell 5 basis points to 2.41 percent.  The dollar index, which tracks the greenback against its major counterparts, slipped 0.2 percent.

Global Daily: Eurozone leaders strike Greek bailout deal

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Eurozone leaders reached a conditional deal for Greece on Monday.  The three-year bailout deal provides about €85 billion of new funding in loans for cash-strapped Greece.  But details on how to bridge a funding gap until an actual disbursement of aids are still being discussed.  In return, Greek government agreed to deep economic reforms under close supervisions by its creditors. The rescue, Greece’s third since 2010, should keep Greece afloat and secure the country’s place in the Eurozone for now.

Global Daily: Greek government submits new reform proposal

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Chinese equities advanced again on Friday, capping the biggest two-day gain since 2008, as unprecedented government support measures helped curtail a stock-market rout that wiped out about $3.9 trillion in market valuation in less than a month.  The benchmark Shanghai Composite index rose 4.5 percent, adding to Thursday’s 5.8 percent gain. The rally helped the gauge rise 5.2 percent this week after tumbling to a 3-month low on Wednesday.

Global Daily: U.S. jobless claims rise in latest week

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Facing a midnight deadline from European creditors, Greek government was racing to finalize a plan of reforms for its third bailout.  Details of Greece’s reform proposals are to be submitted Thursday to give creditors time to review them ahead of a summit of Eurozone and European Union leaders on Sunday.  EU leaders said they will make a final decision Sunday on Greece’s future in the euro.

Global Daily: U.S. private sector employment rises firmly in June

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Greek Prime Minister Alexis Tsipras urged voters on Wednesday to reject austerity measures in Sunday’s referendum on Greece’s bailout package offered by creditors, saying that a “no” vote does not mean a rejection of the euro, but would instead increase pressure on international creditors to give the country an economically viable deal.  Germany said earlier there could be no talks on a new bailout until after Greece’s referendum on July 5th.