European government bonds advanced today, led by those of Italy and Spain, as both the European Central Bank and Bank of England said they remained in full support course. Italy’s 10-year bond yield slid 12 basis points to 4.73% after rising to a four-month high of 4.93%, while comparable Spanish yield fell 16 bps to 4.92% after climbing to 5.13%, the highest since March 28. Meanwhile, benchmark 10-year German bund yield dropped 7 bps to 1.74% after rising to 1.85% on Monday, the highest in more than a year.
Gold and silver prices plunged to near three-year lows as investors continued to unload precious metals on the prospect of reduced stimulus by the U.S. central bank. Gold dropped as much as 4.2% to $1,224.18 an ounce and Silver fell as much as 6.1% to $18.4505 an ounce in London trading, leaving both at their lowest levels since August 2010.
High-income Economies…German consumer confidence rose to a more than 5-year high, according to the GfK institute’s forward looking consumer climate index which rose to 6.8 points for July (its highest since September 2007) from 6.5 in June. Both economic and income expectations of Germans improved further, the latter from already high levels on account of a relatively low unemployment rate and solid wage increases.
US GDP grew an annualized 1.8% (q/q) in the first quarter of 2013 according to revised estimates, a weaker pace than the 2.4% reported earlier. The increase in personal consumption expenditures was less than previously estimated, and both exports and imports are now estimated to have declined in Q1, according to the US Department of Commerce. US GDP had risen an annualized 0.4% in Q4 2012.
Singapore’s industrial production growth slowed to 2.1% (y/y) in May from 5.0% in April, with a faster pace of increase in electronics production (led by semiconductors and peripherals) offset by slower growth in pharmaceuticals production and larger declines across engineering sectors.
Developing Economies…East Asia and Pacific: Thailand's foreign trade deficit expanded in May to $2.3bn in May, up from a shortfall of $1.7bn as exports shrank faster than imports. Exports were down 5.2% (y/y) in May, while imports fell 2.1% (y/y).
Latin America and the Caribbean: Mexico's monthly GDP proxy shrunk by 0.77% (m/m) in April, down from a downwardly revised 0.16% (m/m). April's contraction was the strongest since December, 2012. The declines were led by the services sector which shrunk by 0.57(m/m) from a 0.92 (m/m) expansion in the previous month.
South Asia: Sri Lanka’s central bank reduced reserve requirements for banks by 200 basis points to 6% on all domestic currency deposit liabilities of commercial banks. The central bank is attempting to bring down lending rates, spur credit growth and boost the economy after GDP growth cooled to a three-year low of 6.4% last year, from a record 8.2 percent pace in 2011. The move comes after two reductions in policy interest rates since December 2012.