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Prospects Daily: Euro Area economic sentiment rises, Turkey’s industrial production rebounds, Inflation slows in Chile and Colombia

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Financial Markets… Ireland auctioned through a syndicate of banks its first bond since its sovereign bailout in November 2010, selling €2.5 billion of debt maturing in October 2017. The National Treasury Management Agency targeted a transaction size of around €2 billion, but strong investors’ demand pushed the total order book to €7 billion. The new issue was sold at a yield of 3.35%, down from 3.45% indicated at its launch.

Syndicated lending volumes in the Asia-Pacific region (excluding Japan) tumbled 17.6% to $376.4 billion in 2012 from $456.8 billion in 2011 as rising borrowing costs forced companies to turn to less expensive funding alternatives, such as bonds and bilateral loans. Meanwhile, bond issuance in Asia outside of Japan surged 46.6% to a record high of $788 billion in 2012 and the number of transaction jumped 29.2% to 4,907, according to Bloomberg data.

Gold for February delivery advanced 0.4% to $1,653.30 an ounce in New York trading, gaining for the first time in four days, as multi-month low prices and speculation of increased demand from China spurred buying. Gold price tumbled to a four-month low of $1,626 last Friday.

High-income Economies
Euro Area monthly retail sales rose for the first time in four months in November, increasing a modest 0.1% (m/m) following a 0.7% drop in October. However, seasonally adjusted sales declined at a 5.1% annualized pace in the three months to November, a faster pace than the 3.3% fall recorded in October.  

The European Commission’s Economic Sentiment Indicator (ESI) for the Euro Area rose for the second consecutive month in December, with the index climbing to 87 in December from 85.7 in November. Economic sentiment in the Euro Area improved among consumers and across all sectors, except retail trade.

A separate release from Eurostat showed Euro Area unemployment rate edging up to 11.8% in November from 11.7% in October. At 26.6%, Spain had the highest unemployment rate in the Euro Area; Germany’s unemployment rate was 5.4%; and France’s stood at 10.5%.

German manufacturing orders declined 1.8% (m/m) in November, partially reversing October's 3.8% increase in orders. Foreign orders were down 4.1% (m/m), led by a 6.5% drop in orders from countries outside the Eurozone. In contrast, domestic orders rose 1.3% (m/m) in November, building on to October's 0.2% increase.

Developing Economies
Chile’s inflation slowed to 1.5% (y/y) in December from 2.1% in November - coming in well below the central bank's 3% annual inflation target.

Colombia’s inflation slowed to 2.4% (y/y) in December from 2.8% in November and is well within the annual inflation target of 2-4%.

Industrial production in Turkey increased 11.3% (y/y) in November reversing a 5.7% (y/y) contraction recorded in October. Manufacturing output grew 13.3% (y/y), while mining and quarrying output rose 7.5%. On a monthly basis, production grew by 1.5% in November compared with a 2.6% contraction in October.

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