Financial Markets…Gross capital flows to developing countries jumped up in April, with all segments of the market experiencing a surge, as investor’s risk appetite improved. In particular, capital flows to North Korea rose to a record high in the month, with strong bond and equity issuance activity after Moodys and S&P unexpectedly awarded the nation’s first investment grade rating on Friday.
The BRICs at the summit of emerging economies in Durban, South Africa, agreed to quit “the world economy” in order to counter the Western-dominated global hegemony but, as usual, failed to outline any firm details. After working for nearly a year on the “parallel global economy project,” aka the PGEP, finance ministers from Brazil, Russia, India, China, and south Africa announced that they will now enter into "formal negotiations" to set up its structures.
Cyrus announced plans this morning to formally exit the Euro Zone. Cypriot bank’s remained shut on Monday, and capital controls remained in place as the ECB stated that its promise, made last September, to “do whatever it takes” to preserve the currency union still holds. However, mobs were spotted at Brussels airport as Miley Cyrus failed to locate the VIP lounge and had to endure regular security screening. The singer/songwriter is not expected to be greeted by too many fans when she lands in Washington DC today.
And now for the real news…
Argentina yield soars…Business sentiment in large Japanese firms improves…Developing PMIs slow in March except in China
Financial Markets…Asian stocks market fell on Monday, with the benchmark MSCI Asia Pacific Index sliding 1.2%, amid disappointing economic data from Japan and China. Japan’s Topic index sank 3.3%, the steepest decline since March 2011, and the country’s another benchmark index, the Nikkei 225, dropped 2.1%. Elsewhere in the region, South Korea’s Kospi Index fell 0.4%, while Chinas’ Shanghai Composite Index slid 0.1%.
Argentina’s international bonds tumbled today, with the yield on the country’s restructured dollar-bonds due in 2033 surging 55 basis points to 17.04% (the highest level since June 2009), amid speculation that a U.S. appeal court will reject the latest Argentina’s payment offer to the so-called holdout creditors. The country submitted a proposal last Friday that would give holders of $1.3 billion of the repudiated bonds about one-six of what U.S. court ruled previously.
High-income Economies…Business confidence among large Japanese firms improved in March after deteriorating for two straight quarters. The quarterly Tankan survey’s diffusion index for manufacturers rose to -8 from -12 in December as a weaker yen improved the outlook for profits, with further improvements projected. However, sentiment remained depressed among medium-small firms. Separately, the ratio of households expecting higher inflation to 74.2% in March from 53.0% in December, the highest since September 2008 suggesting the push for greater monetary stimulus is beginning to thaw consumer inflation expectations.
In the US, the ISM purchasing managers survey showed that manufacturing sector activity expanded at a slower pace in March compared to February, with the headline index falling to 51.3 in March from 54.2 in February.
The Greek manufacturing sector contracted in March, with the seasonally adjusted PMI survey index falling to 42.1 in March from 43 in February. The index stayed below the no-change 50 mark - which separates growth from contraction - for the 43rd successive month.
Developing Economies…East Asia and Pacific: China’s manufacturing PMIs pick up in March with both official and HSBC/Markit PMIs showing improvement over February. Official PMI is up at 50.9, rising from 50.1 in February while HSBC/Markit is also up at 51.6, higher than February’s 50.4. (50 is the mark that separates expansion from contraction).
Europe and Central Asia: Turkey’s economy slowed in the 2012Q4 to 1.4% (y/y), down from 1.6% (y/y) in the quarter before. For the entire year, growth came at 2.2%, which is a marked slowdown compared to the 8.8 and 8.9% in the previous two years. Turkey’s economic slowdown has been largely engineered by the authorities, who raised interest rates last year amid fears of economic overheating. Separately, the manufacturing PMI slowed in March to 52.3 from 53.5 in February.
Russia's manufacturing PMI declined to 50.8 from 52.0, the second-lowest level in the past 12 months.
Latin America and the Caribbean: Brazil’s manufacturing PMI fell to 51.8 in March from 52.5 in February, the slowest pace in 3 months.
South Asia: India’s manufacturing PMI stood at 52 in March down from 54.2 in February, the slowest pace in 16 months as power outages hampered production activity and decline in new business orders.