U.S. and European government bonds fell after Federal Reserve Chair Janet Yellen confirmed the U.S. central bank is poised to hike interest rates this year. The yield on the benchmark 10-year Treasury note rose 4 basis points (bps) to 2.16 percent, while the yield on 10-year German bunds, Europe’s benchmark, climbed 5 bps to 0.65 percent.
China’s stocks declined on Friday, wiping out this week’s gain, as capital outflows are estimated to reach a fresh high in August. The Shanghai Composite Index dropped 1.6 percent with trading volumes tumbling 33 percent from the 30-day average. An estimated $141.66 billion left China last month, surpassing the previous record of $124.62 billion in July, according to data compiled by Bloomberg.
High Income Economies
U.S. economic growth has been revised upwards to 3.9 percent in Q2 (saar), from 3.7 percent estimated previously. The unexpected increase was driven by new data showing an up-tick in consumer spending on services, and an expansion of construction, especially the residential sector.
Consumer confidence in France rose to an eight year high in September, increasing by 3 points to 97. After stagnating for 5 months, the strong improvement was unexpected. Still, the indicator remains below 100 (the level signifying neutrality between optimism and pessimism), in the territory where it has been since 2007.
Headline consumer prices in Japan rose by 0.2 percent in August (y/y), the same rate posted in July. Excluding fresh food, however, prices fell by 0.1 percent (y/y), the first decline since April 2013 when the Bank of Japan launched its quantitative easing program, and raises concerns about deflation.
East Asia and Pacific
Citing weaker exports and spending amid a sharp slowdown in China, the Bank of Thailand downgraded its growth projections for 2015 to 2.7 percent from 3 percent. The 2016 outlook was trimmed to 3.7 percent from 4.1 percent. The impact of the mid-year drought on the overall economy as well as the decline in global oil prices also influenced the action, the bank said.
Malaysia's unemployment rate rose to 3.2 percent in July from 3.1 percent in June. The seasonally adjusted jobless rate also edged up to 3.3 percent in July from 3.2 percent in June. The number of unemployed people climbed to 459,900 from 449,900 in June. The labor force participation rate came in at 67.5 percent in July, down from 67.8 percent a month earlier.
Rwanda's gross domestic product (GDP) grew 7 percent in the second quarter from a year earlier, helped by expansion in the industry, agriculture and services sectors, according to the National Institute of Statistics. The industry sector grew by 10 percent, while agriculture expanded 5 percent and the service sector grew by 6 percent.
Ghana’s economy expanded by 3.9 percent (y/y) in Q2 from a 4.1 percent growth in Q1. The services sector was the main driver of growth, led by finance and insurance.
Global Daily: U.S. Q2 GDP growth revised up