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Prospects Daily: Spanish bonds advance, US Philly Fed activity index eases in April, Brazil hikes benchmark rate

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Financial Markets…Japanese shares fell for the fourth time in five days, with the Topix Index sinking 1.2%, as the yen appreciation and falling commodity prices weighed negatively on the country’s stocks. The Topix climbed 11% to the highest level since September 2008 last week, and the gauge surged 57% from mid-November through yesterday.

Spanish government bonds advanced for a second day, with the benchmark 10-year yield sliding to 4.61% at one point (the lowest level since November 2010), as the country auctioned €4.71 billion of Treasury debt maturing between 2016 and 2023. The new debt sale was well received by investors, selling more than its maximum target of €4.5 billion at the lower borrowing costs compared with last month’s auction.

China’s yuan depreciated 0.15% versus the dollar to 6.1813 today, after reaching a 19-year high of 6.1723 yesterday, as the country’s central bank lowered its daily referencing rate by 0.12% to 6.2416, the most since August. The currency has gained 0.8% thus far this year compared to a 1% gain for all of 2012.

High-income Economies US jobless claims ticked up modestly by 2,750 to 361,250 on a 4-week moving average basis last week but remained well below the 4-month high set in March. The 4-week moving average of continuing claims, a measure of the number of people receiving ongoing benefits, dipped to 3,083,000, a decrease of 2,250 from the preceding week's 3,085,250.

Separately in the US, the Conference Board’s leading economic index edged down by 0.1% in March following a 0.5% increase in February, reflecting negative contributions from consumer expectations, building permits, ISM new orders, average workweek in manufacturing and jobless claims data during March. Meanwhile, the Philadelphia Fed said its diffusion index of manufacturing activity in the region edged down to 1.3 in April from 2.0 in March.

Poland's industrial production grew 9.2% (m/m sa) in March offsetting a 2.8% fall seen in February, led by gains in manufacturing and mining.

Developing EconomiesLatin America and the Caribbean: Brazil’s central bank raised its benchmark interest rate by 25 bps to 7.5% in an attempt to contain inflation which has breached the top range of its inflation target.

South Asia: India’s exports grew 7% (y/y) to $31bn in March, while imports fell 3% (y/y) to $41bn, on the back of declining oil imports. For the fiscal year ending in March, exports contracted 1.8% while imports grew 0.4% with a trade deficit of $191bn.

Sub-Saharan Africa: Nigeria’s inflation fell to 8.6% (y/y) in March, down from 9.5% (y/y) in the previous month as base-year effects of higher food prices last year disappear. Food price inflation eased to 9.5% (y/y) in March, down from 11% (y/y) in February.

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