Financial Markets…U.S. Treasuries declined for a third day, with the 30-year bond yield rising as much as 3 basis points to a five-week high of 2.92%, amid more-than-expected drop in weekly jobless claims and pick-up in November retail sales in the U.S. The Treasury plans to sell $13 billion of government securities today, the last of the three debt auctions this week for a total of $66 billion.
The yen dropped to the lowest level in nearly nine months against the dollar, sliding as low as 83.67 per dollar, amid speculation the outcome of Japanese elections this weekend could lead to considerable monetary easing. It also fell versus the euro, depreciating to 109.54 per euro in earlier trading, the weakest level since April 4.
Spain sold €2.02 billion ($2.64 billion) of government bonds on Thursday, including the longest-dated debt it has offered for more than a year, as the government seeks a further a cash boost for its 2013 funding needs. The Spanish Treasury hit its target for the auction selling €681 million of 3-year bonds at an average yield of 3.36%, $803 million of 5-year bonds at a yield of 4.2%, and 540 million of 28-year bonds at a yield of 5.89%.
High-income Economies…US initial unemployment claims dropped by 29,000 to 343,000 in the week ended December 8, while the four week moving average (a less volatile measure) declined to 381,500 from 408,500. Unemployment claims have fallen in the latest four weeks after a superstorm Sandy-related surge.
US retail sales rose 0.3% (m/m) in November, reversing a 0.3% decline in October, mainly due to rising demand for automobiles and holiday shopping. On a seasonally adjusted annualized basis, however, sales edged down to 8.5% in the three months to November (3m/3m saar) from 8.6% in October, but were significantly better than the -0.7% recorded in the three months to August.
The U.S. Federal Reserve kept its target Fed Funds rate at 0-0.25%, and said it intends to keep its main policy rate close to zero until the unemployment rate falls to 6.5% from the current 7.7%. The Fed also announced a new round of bond purchases to keep downward pressure on longer-term interest rates.
The Swiss National Bank kept its benchmark interest rate at zero percent and pledged to uphold its 15-month defense of the franc to protect the economy.
Spain's EU-harmonized consumer price inflation fell to 3% (y/y) in November, from 3.5% in October (-0.2% m/m), as the weak economy eased demand pressures.
South Korea's central bank held its key policy interest rate steady at 2.75 percent, saying that even as exports are improving, economic growth is weak and domestic demand remains sluggish. The inflation rate fell to 1.6% (y/y) in November from Octobers's 2.1% (y/y), mainly due to falling prices of telecommunication services and key items including medicines and televisions, and below the central bank’s 2%-4% target range. The Bank of Korea has cut its rate twice this year by a total of 50 basis points.
Poland’s consumer price inflation declined to 2.8% (y/y) in November from 3.4% in October, closer to the central bank’s 2.5% target, amid weak domestic demand.
Developing Economies…Brazil's retail sales volume rose a seasonally adjusted 0.8% (m/m) in October compared with a 0.3% growth in September led by growing sales of computer, office supplies, communication equipment, motor vehicles, parts and accessories. On an annual basis, retail sales advanced 9.1% in October, after rising 8.5% in September.
The central bank of the Philippines kept its benchmark interest rate steady at a record low of 3.5% stating that inflation forecast are likely to remain moderate and economic growth is expected to stay robust on the back of strong domestic demand.
South Africa's retail sale growth slowed to 0.3% (m/m) in October from 0.6% in September. On the annual basis, retail trade increased by 5.2% - at the same pace as observed in September.