Financial Markets…U.S. Treasuries advanced on Friday, with the benchmark 10-year yield sliding 2 basis points to 1.60%, amid growing concerns over the slow progress of U.S. budget talks. U.S. securities added gains after government data showed personal income and consumption fell short of expectations in October
The Japanese yen dropped to a seven-month low against the euro, depreciating 0.9% to 107.51 per euro in New York trading, as the country’s consumer prices remained flat in October. The yen weakened versus all of its 16 major counterparts as investors speculated that the Japanese government may expand stimulus measures to boost inflation.
Global bond issuance from the Asia-Pacific region rose to a seven-week high of $5.25 billion this week, nearly three times the last week’s volume, as region’s borrowers rushed to the market to sell debt before the end of the year. The bond rally was led by Mongolian government, whom sold its inaugural dollar-bond on Wednesday. The country raised $1.5 billion in the 10-year bond offering that attracted a book of $15 billion, twice the size of its GDP.
High-income Economies…Japan’s industrial production rebounded 1.8% (m/m) in October, partially reversing a 4.1% (m/m) decline in September. However, the rise in October was concentrated mostly in the electronics sector (14.7% m/m increase), with a rise in production of parts for Apple’s new iPhone. October’s industrial output was 4.3% lower than the same month last year. Core consumer prices were flat in October on a year on year basis, following a 0.1% decline in September.
Consumer price inflation in the Euro Area decelerated to 2.2% (y/y) in October, its lowest in two years, from 2.5% in September. The decline reflects a fall in energy inflation as well as weak demand in the Eurozone economy. Inflation is now close to but still above the European Central Bank’s 2% target for the Euro Area. Euro Area unemployment rose further to 11.7% in October from 11.6% in September,
German retail sales fell by 2.8% (m/m) in October after rising 0.5% the previous month. Retail sales were down 0.8% in October compared to the same month in 2011.
Canada’s economy grew at an annualized 0.6% (q/q) pace in the third quarter, the lowest rate in over a year and down from a 1.7% increase in the second quarter, due in part to decline in exports and business investment, and a slower pace of increase in residential investment.
Poland’s GDP growth slowed on a year-over-year basis to 1.4% (y/y) in the third quarter from 2.3% in the second quarter, as private consumption slowed and business investment fell. However, on a quarterly basis, the economy grew 0.4% (q/q), the same pace of increase as in the second quarter.
South Korea’s industrial production rose 0.6% (m/m) in October, a slightly slower pace compared with 0.7% increase in September, aided by an improvement in exports. However, industrial production was down 0.8% from the same month last year.
Developing Economies…Although still weak, Brazil’s GDP growth accelerated in the third quarter to 0.9% (y/y) compared with a 0.5% expansion in the second quarter. On a quarterly basis, growth also accelerated to 0.6% (q/q) compared with a 0.4% increase in the second quarter.
India's growth slowed to 5.3% (y/y) compared with a 5.5% growth in the second quarter pulled down by a slowdown in the farming sector (1.2% compared to the previous 2.9% growth) and construction (6.7% compared to 10.9%). Growth in mining and manufacturing accelerated – but remain weak (growth in mining increased to 1.9% from 0.1% percent and in manufacturing to 0.8% from 0.2%). On a quarterly basis, growth also slowed to 1.0% (q/q) in the third quarter, down from 1.3% in the second quarter.
Mexico's central bank left its benchmark interest rate unchanged at 4.50% making a note of a possible rate increase if inflation accelerates. Mexico's inflation rate eased to 4.6% in October from 4.8% in September, which was the highest level in 2-1/2 years. The central bank targets inflation of 3 percent, plus/minus one percentage point.
Tunisia's central bank held its benchmark interest rate at 3.75%. Tunisia's consumer prices rose 5.3% in October down from September's 5.7% on moderating food prices. Tunisia's central bank does not target inflation, but the CB statements indicate that it is comfortable with the inflation up to 5%.
South Africa trade balance continued to worsen recording a deficit for the ninth consecutive month. October registered a particularly wide trade deficit of R21.2 billion compared to R13.8 billion in September on soaring imports. Imports growth rate (16.7%) swamped the growth rate of exports (7.8%) by a large margin in October. The cumulative deficit for January-October climbed to R104.6 billion compared to R9.4 billion for the same period in 2011.