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DECPG Daily - April 12, 2013: US$ denominated bond sales in Asia surge…US retail sales ease…India IP growth slows

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Financial Markets… U.S. government bonds rose for a second day on Friday, with the benchmark 10-year Treasury yields sliding 5 basis points to 1.74%, as U.S. retail sales eased in March. Renewed concerns over Cyprus in the wake of “further aid” talk also boosted demand for Treasuries.

Dollar-denominated bond sales in Asia excluding Japanreached all-time highs this week as dollar borrowings costs for region’s issuers dropped to a five-week low of 4.26% on Monday. Asian borrowers raised a record high of $7.6 billion in eight debt sales, compared with $150 million from one deal last week. Notably, The Republic of Indonesia sold $3 billion of bonds April 8 and China’s National Petroleum Corp. issued $2 billion debt April 9.

Developing-country shares fell for the first time in four days, with the benchmark MSCI index falling the most in this week, amid the steepest decline in technology stocks and falling commodity prices. India’s Infosys, the major software company, dragged down the MSCI index with a 21% plunge. India’s Sensex index tumbled 1.6%, while Russia’s Micex index sank fell 1% to the lowest level since November.

High-income EconomiesUS retail sales fell by 0.6% m/a sa) in March compared to 1.2% growth in February. The decline which reflected a pullback in auto and gasoline spending, suggests that consumers are becoming more cautious. Over the quarter as a whole, sales were up by 4.1% (q/q saar), compared to a 5.6% outturn in Q4 last year.

Eurozone industrial production rose 0.4% (m/m sa) in February, reversing the previous month’s 0.6% fall. The rebound was driven mainly by strong gains in energy, durable consumer goods and capital goods production, with strong improvements in France and Germany.  The annualized rate of decline in output slowed to -0.5% in the three months to February from -5.9% the previous month.

Singapore’s GDP shrank an annualized 1.4% in Q1 from the previous quarter, when it expanded 3.3%, on weakness in manufacturing and slow service sector growth. Manufacturing contracted for a second consecutive quarter with output falling by 11.3% (q/q saar) in Q1. The trade dependent economy grew 1.3% in 2012, the slowest pace in three years.

Developing EconomiesEurope and Central Asia: Croatia’s retail sales improved slightly as they contracted at 3.3% (y/y) in February, a slower pace of contraction compared to a drop of 6.7% (y/y) in January. However, February is the 13th consecutive month of decline as weak labor markets continued to weigh negatively on consumption.

Middle East and North Africa: Egypt is set to receive an interest-free $2bn loan from Libya. This announcement comes only one day after Qatar announced it would extend a second loan in the amount of $3bn. The loan to Libya is to be repaid within five years, with a three-year grace period.

South Asia: India’s industrial production slowed to 0.6% (y/y) in February, down from 2.4% (y/y) in the previous month. The deceleration was led by contraction in mining and electricity output.