Financial Markets… U.S. Treasuries edged higher on Wednesday, with the benchmark 10-year yield posting a month-to-date decline of 13 basis points, as growing concerns over the U.S. budget sequester and Italy’s political uncertainty boosted investor appetite for safe-haven assets.
Italian government bonds rebounded slightly today, with the 10-year yield sliding 5 bps to 4.85% after the country’s new bond auction received a solid demand. The Italian Treasury sold €6.5 billion ($8.51 billion) of 5- and 10-year notes. Borrowing costs rose to a 3-month high of 4.96% yesterday, following inconclusive election results.
Japan’s Nikkei 225 Stock Average index fell 1.3%, posting its steepest two-day loss since November 2011, as a stronger yen lowered the earnings outlook for the country’s exporters. The Nikkei index tumbled 2.3% yesterday as an inconclusive Italian election outcome renewed euro-zone concerns. The gauge reached its highest closing since September 2008 on February 25.
High-income Economies…US durable goods orders minus volatile transport orders grew for the 5th consecutive month in January, rising 1.9% (m/m sa) after a 1.0% gain in December. Orders for core capital goods, which signal business investment plans, jumped 6.3%, the largest rise in more than two years, after falling in December by 0.3%.
Eurozone economic confidence improved for the 4th straight month in February, with the European Commission’s economic sentiment index rising to 91.1, up from 89.5 in January led by an improvement in industry and service sector confidence.
Japan’s retail sales climbed 2.3% (m/m) in January on a seasonally adjusted basis after being flat in in December.
Hungary’s central bank cut rates for the 7th month in a row, lowering its policy rate by 25 basis points to 5.25% to support a flagging economy and as annual inflation slowed to 3.7% in January above the central bank’s medium-term inflation target of 3%.
Developing Economies…East Asia and Pacific: Vietnam’s inflation eased in February growing 7.0% (y/y) down from 7.1% in January reflecting subdued domestic demand. Inflation is above the central bank’s year-end target of 6%.
Europe and Central Asia: Serbia’s inflation accelerated in January to 12.8% (y/y) from 12.2% in the previous month led by increases in food, alcohol and transportation prices. Inflation has been persistently above the central bank’s target band of 2.5-5.5%.
Latin America and the Caribbean: Argentina’s industrial production picked up in January (0.2%, y/y or 0.6% m/m) led by a rebound in the automotive industry. Industrial output contracted 1.2% in 2012 – the first year-on-year decline since the country's 2001-02 economic crisis – due to slowdown in both external and domestic demand.
Middle East and North Africa: Morocco's trade deficit narrowed 22.8% (y/y) to USD1.5 billion in January, as imports declined more 14.2% (y/y) than the exports 4.6% (y/y). Imports have declined on a monthly basis since last November, helping narrow the deficit.
South Asia: India's FDI declined 19% (y/y) in December 2012 to USD1.1billion. For the entire year, FDI remains starkly lower, down 34% at USD22.7 billion compared to 2011.
Sub-Saharan Africa: South Africa’s GDP accelerated to 2.1% (q/q, saar) Q4 2012 from 1.2% (q/q, saar) in the prior quarter. For the entire year, GDP grew by 2.5% following a 3.5% outturn in 2011, dragged down by mining sector strikes and faltering consumer demand.