Wednesday, June 16, 2010

20100616 1126 Global Economic News.

Indonesia: Economy may expand as much as 6.4%
Indonesia’s economy may grow 6.1% to 6.4% next year, supported by domestic consumption and investment, Finance Minister Agus Martowardojo said. “We hope growth can be supported by household consumption that stays strong, the improving investment climate and the increase in export activities,” Martowardojo said (Bloomberg)

China: Bank regulator sees growing real estate risks
China’s banking regulator said it sees growing credit risks in the nation’s real-estate industry and warned of increasing pressure from non-performing loans. Risks associated with home mortgages are growing and a “chain effect” may reappear in real-estate development loans, the China Banking Regulatory Commission said (Bloomberg)

UK: Inflation slows for first time in three months
UK inflation slowed in May for the first time in three months as lower costs of items from food to transport eased price pressures in the economy. Consumer prices rose 3.4% from a year earlier, compared with 3.7% in April, the Office for National Statistics said in London. Economists predicted 3.5%, according to the median of 30 forecasts in a Bloomberg News survey. Inflation has now exceeded the government’s 3% upper limit for three months. (Bloomberg)

EU: Exports decline, adding to signs of slowdown
European exports declined in April, adding to signs a Euro-region recovery may be losing steam. Exports from the economy of the 16 nations using the euro fell a seasonally adjusted 2.4% from March, when they rose 9.8%, the European Union’s statistics office said. The trade surplus was EUR1.4bn (USD1.7bn) in April and imports dropped 3.5% from March. Euro-area payrolls were unchanged in the first quarter from the previous three months, when they decreased 0.2%, a separate report showed. (Bloomberg)

Greece: Cut to junk by Moody’s on ‘substantial’ risks
Greece’s credit rating was cut to non-investment grade by Moody’s Investors Service, threatening to further undermine demand for the nation’s assets as it struggles to rein in the euro region’s second-biggest deficit. In making the four-step downgrade to Ba1 from A3, Moody’s cited “substantial” risks to economic growth from the austerity measures tied to a EUR110bn (USD134.5bn) aid package from the European Union and the International Monetary Fund. (Bloomberg) US:

Manufacturing is sustaining recovery
Manufacturing is leading the US economic rebound, helping protect the recovery from a slowdown in housing following the expiration of a government tax credit, reports indicated. Factories in the region covered by Federal Reserve Bank of New York grew at a faster pace in June, signaling they are weathering the turmoil caused by the European debt crisis, according to the bank’s Empire State index. (Bloomberg)

US: Fed sells USD1.15bn of term deposits in auction
The Federal Reserve said it sold USD1.15bn in deposits in the first test of a credit- tightening tool it may use to drain a near-record amount of cash from the banking system. The Fed offered USD1bn for 14 days through its Term Deposit Facility and received bids worth USD6.14bn, the central bank said in a statement. The successful banks will deposit money with the Fed from 17 June to 1 July 2010, and receive interest of 0.27%. Banks currently receive 0.25% in interest on their excess reserves. (Bloomberg)

US: Demand for US assets increases more than forecast
Global demand for long-term US financial assets rose more than forecast in April as investors in the UK, China and Japan added to their holdings of Treasuries, a government report showed. Net buying of long-term equities, notes and bonds totaled USD83bn in April, compared with net purchases of a record USD140.5bn in March, Treasury Department data showed. Including short-term securities such as stock swaps, foreigners bought a net USD15 bn, compared with net buying of USD26bn the previous month. (Bloomberg)

June 15 (Bloomberg) -- Credit investors are pricing in almost 35 percent chance that BP Plc will default within five years as it tangles with the Obama administration over cleanup costs and claims for the biggest oil spill in U.S. history. The rising risk implied by credit-default swaps is up from 7 percent a month ago, according to the International Swaps and Derivatives Association’s standard model. BP swaps climbed 68 basis points today to a record close of 506 basis points, CMA DataVision prices show. Investors are demanding 8 percentage points more in yield to own BP debt due next year rather than Treasuries.

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