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Prospects Daily: Gold prices fall, US consumer spending and sentiment ease, Hungary industrial output accelerates

Financial Markets…Oil and gold helped lead commodities lower as the U.S. and Russia started talks on a plan for Syria to surrender chemical weapons and investors weighed prospects for the Federal Reserve to cut stimulus. West Texas Intermediate oil slid 0.9% to $107.64 a barrel in mid-morning trading in New York. Gold for December delivery lost 0.9% to $1,318.10 an ounce. The S&P500 and the Stoxx Europe 600 Index drifted between gains and losses. The yield on 10-year Treasuries fell two basis points to 2.89% and German bund yields dropped 3.5 basis points to 1.97%.

High Income Economies…U.S. retail sales rose only slightly in August, providing the latest indication economic growth slowed in Q3.  Retail sales increased 0.2% (m/m sa) down from 0.4% in July.  In three-monthly annualized terms, retail sales increased 6.7% (3m/3m saar) in August, compared to 5.0% for July.  Increased sales for cars, furniture and appliances led the increase, but were partially offset by declining demand for clothing, sporting goods and building materials.

Separately, U.S. consumer sentiment, as measured by the Thomson Reuters/University of Michigan's consumer sentiment index declined from 82.1 in August to 76.8 in September, the lowest reading since April.  The components were down across the board, with dampened expectations about current conditions, and economic and inflation outlook.

Total employment in the Eurozone fell by 0.1% in Q2, compared to a decline of 0.4% in Q1 implying a slower rate of decline, and boosting confidence in a European economic recovery.  Among the 27 Eurozone countries, employment in Cyprus shrank the most (2.1%), while the highest growth was in Estonia (1.5%) compared to the previous quarter.

Spain's total national debt increased further in Q2 to EUR943 billion, which is 92.2% of GDP, a record high, and breaches the government's target of 91.4%.  The Q1 debt-to-GDP ratio was at 90.1%.  Of the total borrowings, central government debt accounts for 73% of GDP, autonomous governments 18.9%, and local governments 4.2%.

Developing Economies…Europe and Central Asia: Hungary’s final industrial production figures for July show that output grew 2.5% (y/y, sa) in July as previously estimated, faster than the 1.7% (y/y, sa) growth in June.  On month-on-month basis, industrial production expanded 0.3% (sa) as initially estimated from 1.2% (sa) the previous month.  Increased production of machinery and equipment, including transport equipment, was a major factor behind this gain.

Turkey’s retail sales increased 2.2% (y/y) in July, rebounding from a sharp contraction in June when retail sales fell 5.4% (y/y).   Month-on month, retail sales increased 3.10% in July from -4.2% in June.

Middle East and North Africa: Egypt’s annual headline inflation eased to 9.74% (y/y) in August from 10.28% (y/y) in July on account of slowing food prices and lower clothing costs. Month-on-month, the consumer price index rose 0.68% compared with 0.86% in July as lower clothing cost help offset the increase in food prices. Core inflation eased to 8.97% (y/y) in August from 9.06% in July.

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