The Japanese yen broke through ¥102 versus the US dollar after G7 finance ministers refrained from criticizing Japan’s monetary stimulus package at a meeting at the weekend.
Italian and Spanish government bonds fell for a third day amid austerity concerns. Euro-zone finance ministers and central bankers signaled during the G-7 meeting that they are poised to scale back austerity programs to boost growth. Italy’s 10-year yields climbed 8 basis points to 3.97%, while comparable Spanish yields increased 9 bps to 4.29%.
High-income Economies…US retail sales remained flat in April in seasonally adjusted terms following a 0.6% (m/m sa) drop in March. In the three months to April, sales were up 4.4% (3m/3m saar), slightly down from a 4.4% increase in March. Excluding spending on gasoline and autos, spending rose 0.6% (m/m) and by 4.0% annualized in the three months to April.
Portugal's annual rate of inflation, as measured by the harmonized index of consumer prices, eased to 0.4% (y/y) in April from 0.7% in March. The Portuguese government indicated it had reached agreement with the IMF and EU on new action to correct public finances, including steep tax increases, clearing the way for the release of the next Euro 2bn tranche of its rescue package. A previous bailout review in March hit a snag in April when a constitutional court threw out some of this year's planned austerity measures.
Preliminary estimates showed that Estonia's GDP growth slowed to the weakest pace in three years. Output rose by 1% (y/y) in Q1 compared to a 3.7% increase in Q4 last year reflecting a slump in construction and weakness in mining and quarrying.
Developing Economies…East Asia and the Pacific: China’s fixed-asset investment growth in January-April eased slightly to 20.6% (y/y), down from 20.9% in 2013Q1. Separately, growth of industrial production and retail sales picked up in April: 9.3% (y/y), up from 8.9%; and 12.8% (y/y), up from 12.6% in March, respectively.
Middle East and North Africa: Egypt’s inflation accelerated to 8.1% (y/y) in April, up from 7.6% in March, on the back of rising food prices. On m/m basis, food and beverage prices climbed 2.7% in April.
South Asia: India’s trade deficit widened in April to $17.8bn, up from $14bn last year due to a surge in gold imports, as retail consumers took advantage of lower prices to buy more gold. Gold and silver imports rose by 138% (y/y) to $7.5bn in April. Total imports grew by10.9% (y/y) in April, eclipsing a 1.6% increase in exports.