Global Economic Prospects 2014

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Prospects Daily: US oil prices at par with global crude prices, European government debt at historic high, Brazil industrial confidence weakens further

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Financial and Commodity Markets…US oil prices have reached parity with the global crude benchmark Brent for the first time in almost three years. WTI, the US benchmark, whose September contract reached the same level as September Brent, was last at parity with the North Sea contract in October 2010. WTI has traded at a discount to Brent over the past few years as a surge in US oil production – due to the shale boom – led to a glut at Cushing, Oklahoma, the delivery point for the US benchmark.

Prospects Daily: Developing-country equities, bonds and currencies improve, Eurozone housing correction continues, Brazil raises interest rates

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Financial MarketsItalian and Spanish government bonds fell on Thursday, with the benchmark 10-year yields climbing 7 basis points to 4.52% and 8 bps to 4.89% respectively, amid speculation that both countries are likely to struggle to find eager investors for their new debt auctions this year as the economic outlook for the nations deteriorates. The rate on similar-maturity Portuguese bonds also increased 12 bps to 6.89%.

Prospects Daily: Italy credit rating cut, Greek IP momentum builds, China exports and imports fall

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Financial MarketsItaly’s sovereign credit rating was cut to ‘BBB’ from ‘BBB+’ by Standard and Poor’s due to a weakening of the country’s economic prospects and financial system. S&P also said in a statement the outlook on the rating, two levels above junk status, remains negative. Italy’s benchmark 10-year yield rose 5 basis points to 4.45%, the most since July 3.

Prospects Daily: Portuguese bonds tumble...Eurozone PMIs signal easing downturn…China PMI indicates contraction

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Financial MarketsPortuguese government bonds tumbled on Wednesday, with the benchmark 10-year yield jumping as much as 139 basis points to an eight month high of 8.11% in morning trading, after two ministers resigned from the coalition government, putting at risk the country’s attempts to implement austerity measures to meet the terms of its bailout program. The cost of insuring Portugal’s bonds against default also surged to the highest level in eight months, rising as much as 105 bps to 507 bps.

Prospects Weekly: Global financial markets are eager for policy action

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Global financial markets are eager for policy action. Bond yields for high-spread Euro Area sovereigns remain high, but eased somewhat this week with successful bond issuances by France and Spain and optimism that EU leaders will reach agreement to resolve the debt crisis at the forthcoming December 9th EU summit.

Prospects Blog: The euro area crisis: are the spreading market tensions justified?

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Old problems, wider tensions? In a momentous two weeks that saw two of the euro area (EA) countries under joint EU/IMF programs have their sovereign debt downgraded to “junk” status, market tensions widened to include two larger economies that together represent almost thirty percent of the whole EA GDP. Is this behavior by the markets truly justified?