Australia: Corporate bonds are returning more than four times as much as global company debt this quarter as accelerating economic growth drives the longest rally among developed nations. Bondholders have earned 2.8% since Dec. 31 including reinvested interest, beating the 0.6% gain for corporate debt worldwide and 1% on U.S. notes, according to Bank of America Merrill Lynch indexes. (Source: Bloomberg)
Thailand: Says diesel prices may climb as oil fund dwindles. Thai Finance Minister Korn Chatikavanij said the nation may need to curb diesel subsidies as funding runs out, a challenge to the government's efforts to quell inflation and build support ahead of elections this year. "We can continue as long as there is money in the oil fund, and that would last in cash terms until around July," Korn said in an interview with Bloomberg Television. Prime Minister Abhisit Vejjajiva said his policy priority is to help people cope with rising prices. (Source: Bloomberg)
Thailand: Central bank may adjust rates to contain inflation
Thailand’s central bank may raise interest rates further as oil above USD100 a barrel and surging food prices add to inflation pressures stoked by the fastest economic growth in 15 years. Governor Prasarn Trairatvorakul said that the risk on growth is probably less of a concern, so the risk balance is tilted toward inflation. Prasarn said the removal of state subsidies may add 1 ppt to inflation and 0.5 ppt to core inflation, which excludes fresh food and fuel. (Bloomberg)
China: Industrial profits jump aids fastest growing economy
Chinese industrial companies’ profits jumped 34% in the first two months of the year, underscoring the strength of the world’s fastest-growing major economy amid higher interest rates and lending curbs. Profits rose to RMB645.5bn y-o-y. The annual sales threshold for companies eligible for inclusion was changed to RMB20m from RMB5m. Among the 39 industries covered, 38 reported an overall profit with one making losses. The chemical materials and products industries had the highest growth in profit with total earnings jumping 76% y-oy. Telecommunications, computers and other electronic equipment rose 33% and oil and natural gas exploration increased 19%. (Bloomberg)
Japan: Government weighs scrapping company-tax cut, lifting household levies
Japan’s ruling party is considering abandoning a proposed corporate-tax cut and boosting levies on individuals to help pay for earthquake reconstruction and reduce the need to step up bond sales. The government may scrap the planned 5 ppt reduction in company tax rates, a step that the head of the nation’s largest business lobby endorsed. A 2 ppt increase in the sales tax rate, currently at 5%, has also been suggested in order to secure JPY5trn a year. It would be the first increase since 1997, when the sales levy was raised from 3%. (Bloomberg)
UK: Business confidence index falls to lowest in two years
UK business confidence declined in March to the lowest in two years, suggesting the economy may struggle to gather strength in the second quarter. A gauge of sentiment, which aims to predict economic developments four months in advance, fell to 1 from 3 in February. The share of companies that were less optimistic about economic prospects increased to 44% from 36% in the previous month. Among manufacturers, a gauge of confidence fell to 19% in March from 24, while sliding to 10 from 12 among services companies. An indicator of sentiment among retailers fell to 4 from 12. (Bloomberg)
US: Consumer spending climbs more than forecast
Americans increased spending more than forecast in February as incomes climbed, easing concern that rising food and fuel costs might derail the consumer demand that makes up 70% of the US economy. Purchases increased 0.7%, the most since October, beating estimates of a 0.5% gain, after advancing 0.3% the prior month. More than half the gain in spending last month reflected higher prices, one reason it will be difficult for households to contribute as much to economic growth this quarter as last. Adjusted for inflation, consumer spending rose 0.3%. (Bloomberg)
US: Home pending sales rose 2.1% in February
A gain in the number of Americans signing contracts to buy previously owned homes in February failed to make up for the ground lost a month earlier, a sign the US housing market has yet to join the economic recovery. The index of pending home resales increased 2.1% after a 2.8% drop in January. Sales of previously owned homes, which now make up more than 95% of the market, dropped more than forecast last month. Purchases decreased 9.6% to a 4.88m annual rate. The median price fell 5.2% y-o-y. (Bloomberg)
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