Financial Markets…Spanish benchmark 10-year government bond yield fell 4 basis points to 5.29% in afternoon trading, the lowest level in eight months, as investors speculated the region’s debt situation is improving. Italian 10-year bond yield also dropped as much as 12 bps to 4.47% in earlier trading, the least since December 2010.
Oil prices rose for the first time in four days, with West Texas Intermediate crude for January settlement climbing $1.54 to $88.03 a barrel in New York trading, amid an unexpected decline in U.S. crude stockpiles and growing optimism on U.S. budget talks. Brent for January delivery climbed $1.16 to $110.67 a barrel in London trading.
Developing-country equities rose to a three-week high on Thursday, with the benchmark MSCI Emerging Markets Index advancing 1.1%, as a rally in commodity prices and U.S budget optimism boosted investor sentiment. Indian shares led the gain with the benchmark India Sensitive Index (Sensex) climbing 1.8% to its highest level since April 2011 as the country’s stocks were upgraded to overweight by U.S. investment bank, Goldman Sachs.
High-income Economies…The US economy grew at an annualized 2.7% rate in the third quarter of 2012, higher than a preliminary 2% estimate and a significant acceleration from the 1.3% growth recorded in Q2. The revision to Q3 GDP reflects upward revisions to private inventory investment and to exports, partly offset by downward revisions to consumer spending and to nonresidential fixed investment. Consumer spending grew 1.4% in the third quarter (similar to a 1.5% increase in Q2) and exports rose 1.1% (down from +5.3% in Q2), while non-residential fixed investment fell 2.2%. A 14.2% surge in residential fixed investment and a 9.5% increase in federal government spending contributed to the growth acceleration in the third quarter.
US unemployment claims fell by 23,000 to 393,000 in the week ending Nov. 24, as the effects of Hurricane Sandy on the job market in the Northeast began to dissipate.
Sentiment in the Euro Area improved in November, with the European Commission’s index of executive and consumer sentiment rising to 85.7 from 84.3 in October, marking a reversal from the declines experienced in earlier months.
Sentiment improved in industry and retail trade, but fell among consumers and in construction, and was virtually unchanged in services.
Unemployment in Germany rose marginally by 5,000 to 2.94 million in November, but marked the eighth straight month of increases. The unemployment rate held at 6.9%.
Sweden’s GDP expanded at a slower 0.5% (q/q) pace in the third quarter compared with a 0.7% increase in the second quarter (0.7% y/y compared with 1.3% y/y), mainly due to a decline in exports and investment as the Euro Area debt crisis reduced demand for the country’s products.
In contrast, Switzerland’s GDP rose 0.6% (q/q) in the third quarter, after falling 0.1% in the second quarter (+1.4% y/y compared with 0.3% y/y increase), driven by strong domestic demand and an expansion in exports, despite the weakness in the Euro Area, the country’s largest trade partner.
Developing Economies…Brazil's central bank kept its benchmark Selic interest rate steady at a record low 7.25%. Inflation rose to 5.64% (y/y) in November from 5.45% in October and is within the banks targeted 4.5% (+/- 2 percentage points) range.
Brazil’s producer price inflation slowed to 6.37% (y/y) in October from September’s 6.95%. On a monthly basis, the producer price index (PPI) increased 0.21% in October, slower than 0.69% growth registered in September.
Chilean industrial production rose by 9.1% (y/y) in October reversing a 5.6% decline in September on accelerated demand, but also due to a low base of comparison. Production of copper increased by 1.4% (y/y) in October on improved mineral ore grades and increased production at new mines. On a monthly basis, copper output grew 2.6% in October.
South Africa's private sector credit growth slowed to 8.35% (y/y) in October from 9.07% in September and money supply growth decelerated to 5.69% in October from 7.54% growth in September.
South Africa's producer price inflation accelerated to 5.2% (y/y) in October, after easing in the previous three months. Prices for exported commodities fell 1%, while prices for imported items rose 8%. On a monthly basis, producer prices advanced by 0.6% in October after falling by 4% in September.