US: Fed Focusing Increasingly on Inflation Expectations With Policy Unchanged
The cue for the Federal Reserve to start withdrawing its record monetary stimulus may be a measure of its own credibility: inflation expectations. Expectations for annual consumer-price gains have jumped by 43% to 2.10 percentage points since the central bank began its second round of asset purchases in November, as measured by the breakeven rate for five-year Treasury Inflation Protected Securities. The measure is close to levels before the recession -- when the central bank’s benchmark interest rate was 5.25%, compared with about zero today. (Financial Daily)
EU: Greece to Accelerate Asset Sales as Bonds Drop
The Greek government endorsed an accelerated asset-sale plan and EUR6bn (USD8.4bn) of budget cuts to win extra aid and stem a market slide that threatens to swamp the most debt-laden euro-area nations. Belgium had the outlook on its AA+ investment-grade credit rating lowered to negative at Fitch Ratings yesterday as the cost to insure Greek debt against default rose to a record and the yield on its 10-year bonds increased to a euro-era high. Europe’s debt crisis has deepened as euro political leaders clashed with central bankers after floating the prospect of extending maturities on Greek bonds. That “soft” restructuring may also be accompanied by more loans to Greece, which received a EUR110bn bailout last year, now that the government has delivered the additional budget cuts and pledged to speed asset sales. (Bloomberg)
EU: Belgium’s Debt Outlook Revised to Negative by Fitch on Political Stalemate
Belgium had the outlook on its debt rating lowered to negative at Fitch Ratings, which joined Standard & Poor’s in saying that political deadlock complicates efforts to cut the euro area’s third-highest debt load. Fitch may cut Belgium’s AA+ rating, the second-highest investment grade, should the country fail to adhere to its deficit targets, it said in a statement today. Belgium needs to reduce its budget deficit to less than 3% of gross domestic product next year and balance its books by 2015, as agreed with the European Commission. (Bloomberg)
E.U: Services and manufacturing growth slowed in May, suggesting the region's economy is struggling to maintain momentum amid surging energy costs and tougher austerity measures. A composite index based on a survey of euro-area purchasing managers in both industries fell to 55.4 from 57.8 in April London-based Markit Economics said. A reading above 50 indicates expansion. (Source: Bloomberg)
China: Manufacturing may slow on tightening steps, PMI shows. A Chinese manufacturing index fell to its lowest level in 10 months, adding to signs that economic growth is cooling after the government raised interest rates and curbed lending to rein in inflation. The preliminary purchasing managers' index compiled by HSBC Holdings Plc and Markit Economics dropped to 51.1 in May from a final reading of 51.8 in April. A number above 50 indicates expansion. (Source: Bloomberg)
Taiwan: Industrial production increased at the slowest pace in 19 months in April, signaling the island's economic expansion is moderating. Output advanced 6.85% YoY, after gaining a revised 13.73% YoY in March. A separate report showed Taiwan's jobless rate was 4.35% last month, compared with 4.42% in March. (Source: Bloomberg)
Philippines: Reported a budget surplus in April as revenue rose and spending fell. The surplus was PHP 26.3b (USD 606m) last month, compared with a PHP 18.1b deficit reported earlier for March. Revenue climbed 11.1% YoY and spending declined 8.03% YoY, according to the statement. (Source: Bloomberg)
Thailand: Thailand Economic Growth Accelerates, Maintaining Pressure for Rate Rises
Thai economic growth accelerated in the first quarter to the fastest pace in a year, adding pressure for higher borrowing costs to contain inflation as the government prepares for a July 3 election. Gross domestic product rose 2% in the three months to March 31 from the previous quarter, when it climbed a revised 1.3%, the National Economic and Social Development Board said in Bangkok today. The median of 11 estimates in a Bloomberg News survey was for a 2.2% jump. (Bloomberg)
Singapore: Singapore Inflation Rate Slows to Less Than 5% for the First Time in 2011
Singapore’s inflation slowed to less than 5% for the first time this year in April as a strengthening currency reduced the cost of imported goods. Consumer prices rose 4.5% last month from a year earlier, the Department of Statistics said in a statement today. That was the slowest pace in five months, according to data compiled by Bloomberg based on previously released information, and compares with the 4.4% median estimate of 11 economists surveyed by Bloomberg News. (Financial Daily)
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