Global Economic Prospects 2014

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Prospects Daily: China’s stocks post biggest monthly gain since 2012, Eurozone’s consumer price inflation slows to near 5-year low, Philippines’ central bank hikes key policy rates

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Financial Markets

China’s stocks rose on Thursday, sending benchmark indexes to their highest monthly gain since December 2012, amid optimism government stimulus will boost economic growth. The Shanghai Composite Index rose 0.9% to 2,201.56 at the close, the highest level since December 2012, for a monthly gain of 7.5%. Meanwhile the CSI 300 Index advanced 1.2% for a July gain of 8.6%, and the Hang Seng China Enterprises Index, or H-shares gauge, rose 0.2%, extending a rebound since a March low to a 21.0% monthly gain.

Prospects Daily: Argentine bonds surge to 3-year high on prospect of a deal to avoid the country’s second default, U.S. GDP rebounds more strongly-than-expected in Q2, China’s consumer sentiment rises in July

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Argentine bonds surged to a three-year high Wednesday on speculation that government officials and holdout creditors are nearing a deal to avert the country’s second default in 13 years. Argentine dollar bonds maturing in 2033 rose 10 cents on the dollar to 95.5 Wednesday morning in New York, the highest since November 2010. The yield fell to 8.8% from 10.1%. Argentine stocks traded in the U.S. also rose, gaining as much as 31%, while the country’s benchmark Merval stock index advanced 4.8% in Buenos Aires.

Prospects Daily: Dollar rises to highest level in seven weeks on optimism about the U.S. recovery…OECD area consumer price inflation steady at 2.1% in June…South Africa’s jobless rate rises further to 25.5% in Q2

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Emerging-market stocks advanced to an 18-month high as investors waited for the start of a meeting of the Federal Reserve today. The MSCI Emerging Markets Index gained 0.2% to reach 1,081.64 in mid-afternoon trading in London, heading for its highest close since January 2013. The gauge has gained 7.9% this year; in comparison, the MSCI World Index has risen 5.4% in 2014.

Prospects Daily: Brazil real extends losses on turmoil in Middle East and Ukraine, U.S. durable goods orders rise more-than-expected in June, Mexico’s trade surplus declines

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Financial Markets

The U.S. dollar extended gains, rising to a fresh 8-month high against the euro on Friday as durable goods orders rose more-than-expected and a gauge of German business confidence fell more than economists’ forecast hurt by geo-political tensions. The dollar rose 0.2% to $1.3433 per euro after advancing to $1.3428 the strongest since November 21.

Prospects Daily: India’s stocks rally for 8th day to record high, U.S.’s Markit flash Manufacturing PMI falls in July, China’s flash Manufacturing PMI rises strongly

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Financial Markets

U.S.’s Treasuries dropped on Thursday as reports showed that U.S. jobless claims unexpectedly fell to an 8-year low in July. The 10-year yield rose by 4.0 basis points to 2.51% in afternoon trading in New York. The 30-year yield also rose by 4.0 basis points to 3.30% after falling to 3.24% on July 21, its lowest level since June 7, 2013. Year-to-date, Treasuries have gained 3.6%, compared to a loss of 3.4% last year.

 

Prospects Daily: European stocks advance while dollar gains on higher U.S. yields, U.S. June consumer price inflation in line with estimates, South Africa’s leading index rises slightly

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Financial Markets

European stocks rose on Tuesday, rebounding from three consecutive days of losses, amid a global rebound in risk appetite, helped by signs of reduced tensions over the downed Malaysian Airlines plane. The Stoxx Europe 600 Index rose 1.3% in mid-afternoon trading in London after falling 1.5% in the past three days amid tensions over the Ukraine crisis and as intense fighting in Gaza unsettled investors.

Prospects Daily: Global stock market indexes fall amid Gaza and Ukraine concerns, U.K.’s consumer confidence falls for first time in 2014, China signs currency swap agreement with Switzerland

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Financial Markets

Major global stock market indexes fell while bond prices rallied on Monday amid worries over the Gaza strip and Ukraine. The Stoxx Europe 600 Index fell 0.5% to 337.95 at the close in London following a 0.8% gain last week. U.K.’s FTSE 100 declined 0.3%, France’s CAC40 lost 0.7%, and Germany Dax fell 1.1% to its lowest level since May 9. In the U.S., the Dow Jones Industrial Average fell 115 points, or 0.7% to below 17,000 and the S&P 500 index retreated 12 points or 0.6% in mid-afternoon.

Prospects Weekly: Growth in China was 7.5 percent in the second quarter of 2014, Weak activity in the Euro Area and strengthening growth in the US, Steady stock-to-use ratios suggest that grain markets are adequately supplied

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Second quarter growth in China was broadly stable at 7.5 percent in line with expectations, with little indication thus far of a rebalancing away from investment towards consumption. Weak activity in the Euro Area and strengthening growth in the US have led to the widest level of the long-term yield spread in fifteen years. Steady stock-to-use ratios suggest a broadly stable outlook for most grain prices.
 

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