Financial Markets…Greek government bonds rallied, with the benchmark 10-year yield sliding 46 basis points to 17.39%, on optimism that the country will receive the next tranche of bailout funds. 10-year yields on Spanish and Italian bonds fell as well for the first time in three days, declining 5 bps to 5.71% and 6 bps to 4.94%, respectively.
Oil prices advanced for a second day, with WTI (West Texas Intermediate) for December delivery rising as much as 75 cents to $86.40 barrel in New York trading, on forecasts that U.S. stockpile of crude and refined products dropped. And trading was somewhat slow as investors remained cautious ahead of the U.S. presidential election today.
The Czech government’s borrowing costs dropped to a record low, with the 3-year yield on the nation’s bonds falling to 0.32%, as the central bank’s surprise rate cut overshadowed worries that a rigorous fiscal tightening program may face rejection. Notably, yields on 10-year government debt have declined 166 bps thus far this year, cutting spreads over comparable German bunds to 50 bps, the least since April 2010.
High-income Economies…UK industrial output fell 1.7% (m/m) in September compared with August and slumped 2.6% on an annual basis mainly from a sharp 20.9% (m/m) decline in oil and gas extraction caused by maintenance at a number of sites. Manufacturing output edged up 0.1% (m/m) in September, but fell 1.0% on an annual basis.
Germany’s factory orders fell 3.3% (m/m) in September, the most in a year, following a 0.8% decline in August, as Europe’s sovereign debt crisis and slowing economic growth prompted companies to reduce investment and governments and consumers across the Euro Area reduced spending, dampening demand for Germany’s exports.
Markit’s Euro Area services sector Purchasing Managers’ Index (PMI) edged down to 46 in October from 46.1 in September indicating continued contraction of services activity. The composite Euro Area index which includes both manufacturing and services dropped to 45.7 from 46.1, remaining below the 50 mark for the ninth month. Germany’s services PMI fell to 48.4 points from 49.7 points, offset by increases in France (44.6 to 45), Italy (44.5 to 46), and Spain (40.2 to 41.2).
Japan’s index of coincident economic indicators fell 2.3 points in September from August, underscoring broader economic weakness. The index of leading economic indicators, seen as a gauge of the economy a few months ahead, dipped 1.5 points from August.
Developing Economies…The HSBC Markit purchasing managers' index for Brazil suggests that activity in the service sector increased at a slower pace in October, with the index falling to 50.4 from 52.8 in September. The composite output index for service sector and manufacturing sector decreased to 50.7 in October from 52.2 in the previous month.
The Chinese have emerged as the second biggest spenders (after Australians) among tourists visiting New Zealand overtaking the UK for the second position in September as both the number and spending by Chinese tourists grew by around 37% (y/y) in September.
The Philippines’ consumer price inflation eased to a four-month low 3.1% (y/y) in October from 3.6% in September on slower increase in food prices, despite continued policy easing.
The HSBC Markit PMI for Russia at 57.3 suggests that activity in the service sector increased at a fast rate in October. The composite output index for both the service sector and the manufacturing sector increased to 56.6 in October and hit the highest level since April 2010.