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January 2013

Prospects Daily: German retail sales fall in December, GDP growth slows in Russia and Taiwan in 2012, but accelerates in the Philippines

Financial Markets…European stocks (Stoxx 600 index) slid 0.3% for a straight second day loss and the euro weakened 0.2% against the dollar to $1.35 from yesterday’s 14-month high, after reports of weak German retail sales and a large quarterly loss at the country’s biggest lender Deutsche bank. Nevertheless, European shares have gained 2.9% in January, their eighth consecutive monthly gain.

Prospects Daily: GDP contracts in US, Belgium and Spain in Q4 2012, Russian business confidence strengthens

Financial Markets…A total of 278 European banks are repaying €137 billion ($182 billion) in 3-year loans to the European Central Bank today, the first opportunity for early returning of crisis funds from the first longer-term refinancing operation in December 2011 and almost two years before they are due. That represents about a quarter of €489 billion the region’s lenders borrowed roughly a year ago, and a sign that they are less dependent on the crisis loans as their access to market funding has improved  in recent months.

Coordinating the Growth Transition to a Multipolar World

Jamus Lim's picture

Two recent op-eds, one by Gordon Brown and another by Zhu Min, made the call for a global growth compact: one where the asymmetric growth patterns of the West and the emerging world need to be coordinated, to mutual benefit; the failure of which would be due to a prisoner's dilemma outcome of self-defeating coordination failure.

Prospects Daily: German consumer confidence improves, Colombia and India cut policy rates

Financial Markets…The U.S. dollar fell for a second day versus the yen, weakening 0.4% to 90.50 yen in Tuesday morning trade, before a report on U.S. consumer confidence for January and as investors watched a Federal Reserve two-day meeting that may signal a change to its third round of asset-buying program. The greenback also weakened against most of its 16 major counterparts.

Prospects Daily: US factory orders climb higher, Angola and Mongolia cut policy rates

Financial Markets…U.S. Treasuries continued to decline on Monday, with the benchmark 10-year yields climbing to 2% for the first time since April, as better than expected durable goods figures for December added to signs that the U.S. economic recovery is gaining momentum. U.S. government bonds have lost 0.9% thus far this month, posting the worst monthly performance since March.

Prospects Weekly: Net capital flows to developing countries are projected to increase over the 2013-2014 period, global trade growth is projected to accelerate in 2013, real food prices reached record levels in 2012

Supported by increased global liquidity, low interest rates and relatively higher growth prospects among developing countries, net capital flows to developing countries are projected to increase over the 2013-2014 period. After a relatively subdued global trade expansion in 2012, global trade growth is projected to accelerate in 2013, led by developing countries.

Prospects Daily: Danish central bank raised interest rates, U.K. economy flat, German business sentiment improves, Vietnam’s inflation accelerates

Financial Markets…European stocks (STOXX 600 index) advanced 0.2% to a 23-month high and the euro gained 0.6% against the dollar to 11-month high of $1.3470 on Friday as the region’s financial and economic outlook has improved. The European Central Bank said 278 banks will repay next week €137.2 billion 3-year loans provided just over a year ago. Positive news on improved business confidence in Germany also supported the positive outlook. 

Prospects Daily: U.S. Congress voted to temporarily suspend debt ceiling, South Korea’s growth hits three-year low in 2012, but pace of growth accelerates, China’s and Germany’s Flash Markit PMIs point to strengthening economic activity

Financial Markets…Portugal sold €2.5 billion ($3.3 billion) of 5-year government bonds, which was the first 5-year maturity issue in nearly two years, as the country began to regain access to long-term bond markets. The bond was priced at a yield of 4.9% and total investors ‘demand reached €12 billion. Foreign investors bought 93% of the debt, with investors from the U.S. and U.K. accounting for 60% of the issue.

Prospects Daily: Global stock markets rallied on Friday

Financial MarketsGlobal stock markets rallied on Friday, with the benchmark MSCI world equity index hitting a 20-month high level of 552.16, as positive economic data from the two world’s largest economies boosted market sentiment. Along with robust U.S. labor and housing market reports, China’s better-than-expected fourth-quarter GDP growth (y/y), buoyant industrial production and retail sales figures added to signs that the global economic recovery is gaining traction.

Prospects Daily: US unemployment claims fall to 5-year low, Serbia’s central bank raises policy rate

Financial Markets… U.S. and European stocks rose today, amid better- than-forecast initial unemployment claims and housing data in the US and increased revenues for European retailers. The S&P 500 rose 0.4% to 1,478.14 at 10:43 a.m. EST. The Dow Jones Industrial Average added 58.25 points, or 0.4%, to 13,569.48. The Stoxx Europe 600 Index (SXXP) rose 0.4% to 287.04 at 3:49 p.m. in London, the biggest increase since Jan. 9.

Prospects Daily: World Bank's Global Economic Prospects report urges developing countries to safeguard economic growth, as road ahead remains bumpy

The World Bank’s biannual Global Economic Prospects report released on January 15 says four years after the onset of the global financial crisis, the world economy remains fragile and growth in high-income countries is weak. Global GDP grew 2.3% in 2012, slightly below last June’s expectation of 2.5%. Global growth is expected to remain broadly unchanged at 2.4% in 2013, before gradually strengthening to 3.1% in 2014 and 3.3% in 2015.

Prospects Weekly: Gross capital flows to developing countries rose strongly in the second half of 2012

Gross capital flows to developing countries rose strongly in the second half of 2012, buoyed by accommodative monetary policies in high income countries. Industrial activity in high income countries is declining, despite strengthening domestic demand in the US. In contrast, business sentiment in developing countries remains robust and industrial activity is strengthening.

Prospects Daily: Euro Area exports rise in November, Philippines’ remittances growth strong in November

Financial Markets…U.S. Treasuries advanced for a third day on Tuesday, with the benchmark 10-year yield sliding 3 basis points to an almost two-week low of 1.81%, as concerns over the ongoing debt ceiling debate boosted demand for safe-haven government securities. Notably, U.S government bonds declined 0.4 percentage point in the first two weeks of January, while the country’s corporate debt gained 4.6 percentage points.

Prospects Daily: Yen depreciates further, India’s WPI inflation falls insignificantly, Kenya cuts its policy rate

Financial Markets…The Japanese yen depreciated as much as 0.6% to 89.67 per dollar in New York morning trade, the weakest level since June 2010, amid growing investors’ speculation that the Bank of Japan will push for further monetary stimulus. The yen also declined to a 20-month low versus the euro, dropping to 120.13 in earlier trading.

Prospects Daily: US trade deficit widens in November, Inflation in China accelerates, India’s industrial production slows

Financial Markets…Italian government bonds advanced for a fourth day, pushing the yield difference over comparable German bunds down to less than 250 basis points (at 248 bps) for the first time since July 2011, amid growing optimism that the region’s debt crisis is easing. The country’s 10-year bond yields fell as much as 7 bps to 4.09%, the lowest level since November 2010.

Prospects Daily: ECB keeps key policy interest rate steady, Chinese export growth accelerates to double digits

Financial Markets…The euro strengthened against the dollar and the yen, gaining 0.9% to $1.3184 and 1.3% to 116.32 yen, as the European Central Bank left interest rates on hold and said there are some signs of economic stabilization. Spain’s successful bond auction today, in which the government sold more than the maximum target amid strong investor demand, also weighed positively on the single currency.

Prospects Daily: Inflation slows in Mexico and accelerates modestly in Russia, Egypt’s PMI plunges to record low

Financial Markets…Moody’s Investors Service upgraded the sovereign credit rating of Paraguay by one notch to ‘Ba3’ from ‘B1’, citing the country’s steady financial strength. The rating agency said in a statement Paraguay’s public finances are likely to remain robust despite volatile growth, and noted the country’s steady accumulation of foreign-exchange reserves. Moody’s upgrade puts the country’s rating at par with that of El Salvador and Nigeria.

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

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.

World Bank published latest commodity prices: January 2013

John Baffes's picture

In December 2012, energy and non-energy prices rose by 0.4% and 1.1%, respectively.  Food prices are down by 1.3%, beverages declined by 2.1%, raw materials increased by 2.2%, metals rose sharply by 5.2% and fertilizers eased by 0.2%. The US dollar depreciated 2.2% against the euro and 0.6% against a broad index of currencies.

Euro Area producer price inflation slows, Indonesia's current account deficit stabilizes

Financial Markets…Global equities turned lower on Monday, with the benchmark MSCI world equity index sliding 0.15% from an 18-month peak level, as some investors took profits following last week’s stock market rally. Notably, the Standard & Poor’s 500 Index declined 0.4% from a five-year high on Friday, and Europe’s Stoxx 600 index dropped 0.3% after reaching its highest level since February 2011 last week.

Prospects Daily: China’s non-manufacturing PMI suggests expansion, manufacturing PMIs for India and Turkey rise

Financial Markets…A global stock markets rally stalled on Thursday, with the benchmark MSCI world equity index sliding about 0.2% from a 18-month high, as concerns over U.S. budget worries resurfaced. Meanwhile, developing-country stocks gained for the ninth consecutive day on positive China’s economic data, posting the longest winning rally in more than 14 months.