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Prospects Daily: German bonds advance, Poland’s inflation eases,The Philippines register record high remittances,Tanzania’s inflation eases

Financial Markets…Inflows to emerging market bond funds totaled $2.6 billion in the week ending February 13, while equity funds received inflows of $1.8 billion. Bond fund drew more investment than equity funds for the first time in 10 weeks. Meanwhile Asian equity funds attracted $535 million, marking a 23rd consecutive week of inflows. 

Japan’s Nikkei 225 Stock Average slid 1.2% led by exporters and banks on growing concerns over the Euro-Area economy and discussions taking place between the G-20 country leaders related to yen depreciation. The broader Topix index lost 1.3% at the closing, dropping 1.6% for the week.

German bunds advanced for a second day, with the benchmark 10-year yields approaching a three-week low of 1.58%, as lingering worries over troubled Euro-Area economies underpinned the demand for the safe-haven government debt.

High-income EconomiesJapan's industrial production grew 2.4% (m/m) in December, slightly slower than the 2.5% increase in November. On an annual basis, output was down 7.9% (y/y) in December.
 
Poland’s consumer prices increased 1.7% (y/y) in January, slower than the 2.4% gain recorded in December and reflecting weak economic activity.

U.K.
retail sales fell 0.6% (m/m) in January from the previous month, following a 0.3% decline in December. Sales were affected by heavy snow falls in the latter half of January which caused the food store sales to plunge by 1.6%. On an annual basis, retail sales fell 0.6% (y/y) in January, reversing the 0.1% gain recorded in December.

Industrial production in the US fell by 0.1% (m/m) in January following a revised 0.4% increase in December reflecting a 0.4% (m/m) decline in manufacturing output and 1% decline in mining production. Production of motor vehicles and parts fell by 3.2% contributing to the pullback by manufacturing output. The capacity utilization rate edged down to 79.1% in January from an upwardly revised 79.3% in December. Capacity utilization in the manufacturing and mining sectors fell to 77.6% and 90.8%, respectively, while capacity utilization in the utilities sector climbed to 74.8%. On an annual basis, industrial production grew 2.1% in January, slightly slower than a 2.2 gain registered in December.

First-time claims for U.S. unemployment benefits fell to 341,000 in the week ended February 9th showing a decrease of 27,000 from the previous week's 368,000. Meanwhile, the less volatile four-week moving average increased to 352,500, by 1,500 from the previous week's revised average of 351,000. The modest increase by the four-week moving average came after it fell to its lowest level in almost five years in the previous week. Continuing claims fell to 3.114 million in the week ended February 2nd from preceding week's unrevised level of 3.244 million. With the decrease, continuing claims fell to their lowest level since coming in at 3.104 million in the week ended July 12, 2008. The four-week moving average of continuing claims dropped to 3,187,250 from the preceding week's revised average of 3,216,000.

Developing EconomiesEast Asia and Pacific: Remittances to the Philippines, a  key source of foreign exchange and support to domestic consumption, increased by 9.7% (y/y) in December, up from 7.6% the previous month, to a record monthly high of US$1.98bn. For the year as a whole, cash remitted by overseas Filipinos also hit a new record of US$21.4bn, up 6.3% from 2011. Separately, industrial output growth fell slightly to 9.3% (y/y) in December from 9.9% the previous month.

Europe and Central Asia: Russia’s industrial production continued to slump, falling by 0.8% (y/y) in December, after growing by just 1.4% in December. This was the first annual contraction since January 2009 and was led by declining output in the mining and manufacturing sectors.

Latin America and the Caribbean:
Argentina’s headline inflation accelerated to 11.1% (y/y) in January from 10.8% in December. In monthly terms inflation rose by 1.1% (m/m) compared to a 1% jump in December. Inflation has remained stubbornly high in recent months even as the economy has cooled.

Chile’s central bank left its benchmark nominal overnight rate unchanged at 5% for the 13th straight month. Inflation is the lowest in Chile compared to the region, at 1.6% (y/y) in January, (up from 1.5% at the end of last year) and below the central bank’s inflation target range of 2-4%.

Middle East and North Africa: Inflation in Iran continues to soar towards the 40% mark, a level last seen in 1996. Inflation climbed to 37.2% (y/y) in January, from 36.9% in December. In monthly terms, prices rose by 1.7% (m/m) following a 2.5% increase in December. 

Sub-Saharan Africa: Tanzania’s inflation rate eased in January to 10.9% (y/y) from 12.1% in December. In monthly terms, prices rose by 1.3% (m/m), compared to 1.9% in December led by a slower rate of increase in food prices.