US industrial production rose 0.1% in March (0.3% in Feb), held back by a drop in utilities output as heating demand fell. It was far less than economists had expected for a 0.7% gain. Manufacturing output rose 0.9% while utilities dropped 6.4% in March. For the first quarter, industrial production rose by 7.8% yoy, the largest quarterly jump since 4Q99. Capacity utilization, a closely watched measure of slack in the economy, rose to 73.2% from 73.0%, which was in line with market consensus (73.3%). (CNBC, Bloomberg)
Foreign investors bought a net US$47.1bn of long-term US securities in February (US$15.0bn in Jan), with private buying outpacing purchases by official institutions. Overall inflows, which include short-term securities such as Treasury bills, also improved in February, with foreigners buying a net US$9.0bn after selling a net US$10.2bn in the prior month. (CNBC)
The Philadelphia Federal Reserve Bank said its business activity index rose to 20.2 in April from the March reading of 18.9. Economists had expected a reading of 20.0. Any reading above zero indicates expansion in the region's manufacturing. (CNBC)
The US Federal Reserve has made clear it will not monetize federal budget deficits by printing money, said Dallas Federal Reserve Bank President Richard Fisher. The Fed is finished with its job of providing liquidity to markets during the financial crisis and is debating how best to withdraw reserves from the financial system. "Our balance sheet is way too large. We have assets on our balance sheet which will create problems unless we figure out how to manage them," he said. (CNBC)
US foreclosure activity jumped 19.0% to a monthly record in March, driving first-quarter actions up 7.0% qoq and 16.0% yoy to a record of more than 932,000 properties. Banks took back more than 257,000 properties in the quarter, a record high, putting repossessions on pace to shatter last year's record of more than 918,000 properties. More than 3.0m households are likely to get a foreclosure notice in 2010, topping 2009's record 2.8m, RealtyTrac forecasts. (CNBC)
The National Association of Home Builders/Wells Fargo index of builder confidence increased to 19 in April (15 in Mar), exceeding economists’ estimates of 16. It was due to buyers rushing to qualify for an Obama administration cash incentive by signing deals ahead of a 30 Apr deadline, sending the builders’ gauge of current home sales to the highest level in two years. Readings less than 50 mean more respondents said conditions were poor. (Bloomberg)
Federal Reserve President Jeffrey Lacker said the US economic recovery has “turned the corner” and stronger growth will eventually lead to higher interest rates. “I am convinced rates have to go up. I am just not convinced they have to go up this month. I am looking for a time when growth is strong enough and well enough established. We are getting there but we are not there yet in my mind,” Lacker said. (Bloomberg)
Federal Reserve Bank of Atlanta President Dennis Lockhart said low interest rates are still needed to nurture an economic recovery that remains vulnerable to setbacks. “There is risk associated with starting a process of tightening too soon,” Lockhart said. (Bloomberg)
St. Louis Federal Reserve Bank President James Bullard said that the Fed's oftrepeated "extended period" of "exceptionally low" interest rates will depend entirely on how the economy unfolds. A faster than expected recovery would justify the Fed raising rates sooner, but if the economy goes more slowly than expected and inflation stays low, then the Fed could delay tightening. (Xinhua)
Federal Reserve Chairman Bernanke said China undervalues the yuan to promote exports, and that a more flexible currency would help the economy keep inflation under control. “Most economies agree that their currency is undervalued and has been used to promote a more export-oriented economy,” Bernanke said during the testimony to the Joint Economic Committee of Congress. (Malaysia Reserve)
Australian consumers’ inflation expectations rose to 4.1% in April (3.2% in Mar), marking the highest level in 18 months. This makes it more likely that the central bank will continue its world-leading round of interest-rate increases. (Bloomberg)
The Bank of Japan (BoJ) raised its economic assessment in seven of the country’s nine areas as the export-led recovery begins to gain momentum even as deflation persists. All local economies “had picked up, although there remained differences in the pace and extent of the recovery,” the central bank said. (Bloomberg)
China’s economic growth accelerated 11.9% yoy in 1Q10 (10.7% in 4Q09), the fastest pace in almost three years, highlighting overheating risks that may prompt the government to scrap the yuan’s peg to the dollar. It was slightly above the economists forecast for a 11.7% yoy gain. Investment contributed 6.9% pt to growth, consumption accounted for 6.2 pt and net exports deducted 1.2 pt. China may post more trade deficits in the first half after the first shortfall in six years in March, the commerce ministry said. (Bloomberg)
China’s consumer prices rose 2.4% yoy in March (2.7% in Feb). Economists’ median estimate was 2.6%. Industrial production climbed 18.1% yoy in March (12.8% in Feb), which came in line with the market consensus (18.2%). Retail sales increased 18.0% yoy in March (22.1% in Feb), matched the median estimates (18.0%). (Bloomberg)
Clashes between the Thai army and anti-government protesters are undermining confidence and growth in the economy, Finance Minister Korn Chatikavanij said. Tourism may be “decimated” by the unrest, and economic growth may be shaved by 1.0-2.0% pt, even without taking into account the impact on consumer confidence, Korn noted.
- “Unless we put an end to this and do it as peacefully as we can in the next few days, next few weeks, I think there will be a significant impact on prospects for Thailand. The Thai baht may also be affected when financial markets reopen today after a three-day New Year holiday, but I would expect that the long-term trend of the Thai baht should be maintained,” Korn said. (Bloomberg)
South Korea’s major department stores sales advanced 4.6% yoy in March (15.2% in Feb), marking the 13th straight month rise, driven by demand for furniture and home appliances. Discount-store sales rose 1.6% (30.8% in Feb). (Bloomberg)
China’s cabinet raised minimum mortgage rates and down payment ratios for some home purchases, saying “more forceful” steps are needed to cool speculation after property prices rose at a record pace in March. Down payments for second homes must be at least 50%, up from 40%, and interest rates can’t be lower than 110% of benchmark rates, the State Council said. Banks should also raise down payment ratios and rates for third homes “by a broad margin.” Down payments for first homes bigger than 90 square meters can’t be lower than 30%. (Bloomberg)
Singapore retail sales increased 4.8% yoy in February (2.1% in Jan). Excluding motor vehicles, sales rose 20.1%. However, on a month-on-month basis, retail sales fell 5.5% in February (+5.5% in Jan). Economists had projected it would increase 2.0% yoy in February. (Channel News Asia, Bloomberg)
Indonesia’s President Susilo Bambang Yudhoyono has said they will continue to improve its investment climate as the country strives to attract private sector participation to jointly develop its infrastructure to boosts its economic growth in the next 5 years. To meet the demands, the World Bank estimates that Indonesia needs US$50bn a year (about 10% of its GDP). Currently, Indonesia is only able to set aside 4 percent of its GDP for infrastructure spending. (Channel News Asia)
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