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Prospects Daily: ​Developing-country stocks and currencies tumble, U.S. jobless claims show unexpected decrease to 14-year low while industrial production surges, Turkeys’ current account deficit less than expected

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Financial Markets

Developing-country stocks and currencies tumbled on Thursday amid deepening worries over slowing global growth. The MSCI emerging market stock index slumped 1.2% with Indian shares dropping to a 2-month low, while the benchmark gauge that track 20 developing-country currencies fell 0.6% with the Russian ruble sliding to a fresh record low. Oil prices continued to decline as well with West Texas Intermediate (WTI) crude fell below $80 a barrel for the first time since June 2012.

High Income Economies

Prospects Daily: U.S. Treasuries post biggest weekly gain in six months, Japan’s Leading Index rises for first time this year,Turkey’s industrial production climes 5.2% y/y in August

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Financial Markets

U.S. Treasuries slid for a fourth week as the market welcomed the dovish tone of September’s FOMC minutes. The FOMC minutes stressed risks that external demand growth and the surging dollar might curtail growth and inflation in the U.S.. The benchmark 10-year yield has declined 13 basis points this week, the most since the week ended March 14. The yield has reached 2.28% yesterday, the lowest since June last year.

Prospects Daily: U.S. Treasuries remain strong on safe-haven demand, IMF urges more government spending with world economy stuttering, South Africa’s August manufacturing down 2.1% y/y

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Financial Markets

Yields on the benchmark U.S. 10-year Treasuries were trading at near-lowest level in 15 months as mounting concerns over slowing global growth boosted the safe-haven appeal for the U.S. government debt. The U.S. 30-year yields also reached the lowest level since May 2013 before a $13 billion auction of the 30-year securities today. European bond yields from France to Portugal fell to record lows after German exports dropped the most in August since 2009.

Prospects Daily: Global equities fall on growth concerns, OECD leading index remains unchanged in August, China services PMI edges lower in September

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Financial Markets

European and Asian stock markets slumped on Wednesday amid heightened concerns over global economic growth. Investors are reacting to more evidences of weak growth as economic data from China, Spain, and Germany seemed to support the gloomy global outlook painted by the International Monetary Fund on Tuesday. U.S. equities opened lower with the S&P 500 index falling to an eight-week low in morning trade. The benchmark MSCI world stock index slid to its lowest level since mid-April.

Prospects Daily: German government bonds advance on weak factory-orders data, which recorded the worst single-month drop since 2009, Turkeys’ September inflation lower than expected

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Financial Markets

German government bonds gained on Monday as a report showed the country’s factory orders recorded the worst single-month drop since 2009, spurring worries over the slowdown of Europe’s biggest economy. German benchmark 10-year yields fell as much as 3 basis points (bps) to 0.90%. In contrast, government bonds from high-yielding European countries fell with 10-year yields on Italian, Spanish, and Greek debt all climbing.

Prospects Weekly: Russia’s economy has continued to weaken, The World Bank baseline scenario is for economic growth to remain weak, Policies should emphasize growth-enhancing measures

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Russia’s real GDP expanded 0.8 percent (y/y) in the second quarter of 2014, its lowest growth rate in five quarters, slowing from the first quarter’s modest 0.9 percent (y/y) expansion. An intensification of geopolitical tensions would create additional risks to growth and more subdued investment and consumption spending could see the economy flip into a protracted recession.
 

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