Thursday, March 18, 2010

20100318 1515 Global Economic News.

Producer prices in the US fell in February more than anticipated, led by a drop in fuel costs and signaling there are few inflation pressures building in the early stages of the economic recovery. The 0.6% decrease in prices paid to factories, farmers and other producers was the biggest since July and followed a 1.4% January increase. Excluding food and fuel, so-called core prices climbed 0.1%. (Bloomberg)

American Petroleum Institute reported US petroleum deliveries for February rebounded by 0.6% from January. With the exception of jet fuel, all major petroleum products experienced increases from January to February. February's gasoline demand (+2.2%) was the highest monthly demand for any February. However, key indicators of economic conditions - demand for distillate fuel (-6.0%) and jet fuel (-4.1%) -- were still below year ago levels. Crude inventories for February 2010 inched up for the second month in a row to 339.9m barrels. (Xinhua)

Fed Chairman Ben Bernanke made his strongest case yet to Congress on Wednesday for the Federal Reserve keeping its regulatory oversight powers over banks large and small. Bernanke told the House Financial Services panel he's "quite concerned" about proposals to limit the Federal Reserve's regulatory power to watching out for only the biggest banks. He called the proposal a "bad idea." (CNN Money)

Members of the US Congress threatened Beijing with duties on some of its exports if it fails to revalue its currency, pressuring the Obama administration to label China a currency manipulator. A bipartisan bill introduced in the US Senate merges previous legislative efforts to press China to change policies that critics say keep its yuan currency cheap, effectively subsidising Chinese exports and taxing competing imports. (Financial Daily)

The European Union (EU) warned that a dozen EU governments including Germany risk missing their deficit targets, a day after finance ministers adopted a bailout framework for debt-stricken Greece. Germany, France and 10 other EU nations are using “favorable” economic forecasts to draw up their deficit-cutting projections, the European Commission said. It told most of the countries to either take further steps or explain how they will bring their budget gaps back within the EU limit of 3.0% of GDP. (Bloomberg)

The best solution to Greece's debt woes is assistance from inside the Eurozone, but the southern European country is leaving all options on the table, including help from the International Monetary Fund if it is needed, the country's Prime Minister Georgios Papandreou said on Wednesday. Greece has a budget deficit more than four times the EU's stipulated limit and has committed to a strict austerity plan to cut it. But it has to refinance a large portion of its debt in the coming weeks and if it is unable to do so in the markets it could need to seek outside help. (Xinhua)

The current dollar-denominated global reserve system needs to be reformed to better fit economic reality and ensure global financial stability, the head of Asian Development Bank (ADB) said. ADB president Haruhiko Kuroda also said robust growth in developing Asia could prompt a surge in capital inflows to the region, leaving Asia vulnerable to more volatile exchange rates and exacerbating trade and other imbalances. (Financial Daily)

The combination of record mutual fund inflows and the fastest economic growth are failing to lift shares in the largest developing nations with valuations at the highest level versus advanced countries since at least 1995. Emerging-market stock funds lured US$86.6bn in the year through January, the most in 14 years of data, according to Cambridge, Massachusetts-based researcher EPFR Global. (Bloomberg)

World Bank forecast that China will achieve 9.5% GDP growth in 2010 (vs. a 9.0% growth in its previous forecast), generated by recovered exports and solid household consumption. "Exports are likely to continue recovering amidst a pick-up in the global economy and real estate activity is likely to grow strongly this year," it said. However, the report warned of macroeconomic risks that included a property bubble and strained local government finances. (Bloomberg)

The Bank of Japan (BoJ) doubled a lending program aimed at stoking credit growth after the government stepped up calls to arrest deflation that’s hampering the economic recovery. Governor Masaaki Shirakawa and his board increased the three-month loan facility to ¥20tr (US$222bn). They also held the overnight lending rate at 0.1% as expected by all economists. Shirakawa said there is no “miracle” cure to stem declines in prices that are deepening even as the economy sustains a revival from its worst postwar recession. (Bloomberg)

Japan’s tertiary index rose 2.9% mom in January (-0.9% in Dec 09), marking the highest increase in more than a decade and adding to evidence that the export-led recovery is starting to benefit households. Economists had projected for a 1.3% mom gain in the month. (Bloomberg)

Singapore’s exports grew at a faster pace by 26.4% yoy in February (22.7% in Jan) as electronics and pharmaceutical shipments gained, boosting the island’s economic recovery. Non-oil domestic exports rose 23.4% yoy (20.5% in Jan). Both exports and nonoil domestic exports numbers beat the market consensus of a 18.5% and 18.0% gain respectively for February. (Bloomberg)

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