Six central banks led by the Federal Reserve lowered the cost of emergency dollar funding for financial companies in a global effort to ease Europe’s sovereign-debt crisis. The new interest rate is the dollar overnight index swap rate plus 50bp, a 0.5%pt cut, and the program was extended by six months to 1 Feb 13, the Fed said. The Fed coordinated the move with the European Central Bank as well as the Bank of Canada, Bank of England, Bank of Japan, and Swiss National Bank. (Bloomberg)
Australia: RBA straddles record house slump
Australia’s central bank, weighing a second consecutive interest-rate cut next week, is caught between the weakest housing-loan growth on record and signs the nation’s biggest resource boom is accelerating. Reserve Bank of Australia Governor Glenn Stevens lowered borrowing costs 1 Nov by 0.25% to 4.5% as Europe’s sovereign-debt crisis threatens to slow growth in Asian nations. Futures traders are betting he will ease again at the 6 Dec meeting. (Bloomberg)
NZ: Terms of trade fall for first time in two years
New Zealand’s terms of trade index fell for the first time in two years in the third quarter as a rising currency and weaker global markets curbed prices for milk, meat and lumber exports. The index, which measures the price of exports relative to imports, declined 0.7% from the second quarter, when it reached a 37-year high. Export prices dropped the most since 2009, declining 4%, while import prices slid 3.4%. Lower prices for goods and services sold abroad add to the case for slow economic growth and may hinder PM John Key’s efforts to boost incomes and create jobs after winning re-election five days ago. Commodity prices have slumped amid concerns about US demand and the impact of the European debt crisis on sentiment, curbing exports which make up 30% of the economy. (Bloomberg)
Singapore's job market appeared rosy in 2011, with the employment rate hitting a new high of 78% from 77.1% in 2010 for the resident population aged 25 to 64. (CNA)
China: Reserve-ratio cut may signal economic slowdown deepening
China’s reduction in reserve requirements for banks, the first since 2008, may signal government concern that a slowdown in the world’s second-biggest economy is deepening. Reserve ratios will decline by 50 bpts effective 5 Dec, the central bank said on its website yesterday. The move may add CNY350bn (USD55bn) to the financial system. A report due today may show that China’s manufacturing contracted for the first time since Feb 2009, and the nation’s stocks had their biggest decline in almost four months yesterday. Premier Wen Jiabao aims to sustain the economic expansion as Europe’s debt crisis saps exports, a credit squeeze hits small businesses and a crackdown on real-estate speculation sends home sales sliding. (Bloomberg)
China will double a surcharge on power sales to Rmb0.008 per kWh to subsidize renewable power generation from Thursday, the National Development and Reform Commission said. It will also raise power prices for non-residential users by Rmb0.03 per kWh. (Reuters)
Japanese manufacturing activity contracted in Nov at the fastest pace since the record earthquake triggered a nuclear crisis as slowing growth in China, a strong yen and floods at factories in Thailand hurt Japan's output. The Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 49.1 in Nov from 50.6 in the previous month. (Reuters)
Japan’s factory production rose 2.4% mom in Oct (-3.3% in Sep), the government said. Economists expected an increase of 1.1%. (AP, Bloomberg)
Japanese wage earners' total cash earnings rose 0.1% yoy in Oct (-0.4% in Sep), labour ministry data showed, marking the first increase in five months in a tentative sign wage declines could stabilise. (Reuters)
Japanese automobile production climbed 20.3% yoy in Oct (-4.5% in Sep), the Japan Automobile Manufacturers Association (JAMA) said. (Xinhua) Japan’s construction orders received by the 50 largest contractors rose 24.3% yoy in Oct (-9.3% in Sep), the first rise in two months. the Ministry of Land, Infrastructure, Transport and Tourism said. (MNI)
Japan’s housing starts fell 5.8% yoy in Oct (-10.8% in Sep), falling for the second straight month, data from the land ministry showed, as worries about a slowing global economy and a strong yen hurt demand. Economists expected a 6.2% annual decline. (Reuters)
Industrial production in South Korea jumped 6.2% yoy in Oct (+6.9% in Sep), Statistics Korea said on Wednesday, and above forecasts for an increase of 5.4%. (Bloomberg)
The Bank of Thailand cut its economic growth forecast for 2011 to 1.8% from the 2.6% seen last month. It forecast 4.8% growth in 2012, spurred by reconstruction, up from 4.1% earlier. (Reuters)
Thailand’s Business Sentiment Index (BSI) fell sharply to 36.7 in Oct from 48.5 in Sep. (The Nation)
Thailand’s Commerce Ministry will sell low-priced rice at THB110 per 5-kg bag this weekend to ensure that low-income consumers do not suffer from the higher price following the government's policy to push up the price of rice. (The Nation)
Thailand’s current account surplus narrowed in Oct as the faltering global economy and local flooding hurt exports and tourism. The surplus was US$39m, compared with a US$404m surplus in Sep. The median estimate was for a US$568m deficit. (Bloomberg)
Bank of Thailand cut interest rate by 25bp to 3.25% as forecast by 9 out of 17 economistssurveyed by Bloomberg; 8 had forecast 50bp cut to 3%. The central bank cut 2011 GDP growth forecast to 1.8% from 2.6% due to floods while raising 2012 growth forecast to 4.8% from 4.1% previously. The central bank said it may ease policy further if the nation struggles to recover from the inundation. (Bloomberg)
India's M3 money supply rose 15.2% yoy as on 18 Nov, from 16.1% a fortnight ago. (Reuters)
India’s economy expanded by 6.9% yoy in 3Q11 (7.7% in 2Q11), matching the median forecast and marking the lowest economic growth in two years. (Bloomberg)
Bank Indonesia estimates GDP will expand 6.3% next year, down from its previous forecast of 6.7%, Deputy Governor Halim Alamsyah said. It expects economic growth this year of 6.6%. (Jakarta Post)
Pakistan: Keeps rates on hold to spur growth as investment drops
Pakistan’s central bank left interest rates unchanged, pausing to gauge the impact of a 2% cut since the end of July as foreign investment declines. The State Bank of Pakistan kept the discount rate at 12%, Syed Wasimuddin, a central bank spokesman, said in Karachi yesterday. Emerging markets from Indonesia to Thailand have eased monetary policy to support consumer demand as Europe’s debt crisis threatens a global economic slump. A 3% drop in the inflation rate this year has boosted Governor Yaseen Anwar’s scope to bolster Pakistan’s expansion. (Bloomberg)
Brazil: Cuts rate for third meeting to 11% as economy slows
Brazil’s central bank cut borrowing costs by half a point for a third straight meeting as a global economic slowdown threatens to exacerbate a slump in domestic demand. The bank’s board, led by President Alexandre Tombini, yesterday voted unanimously to reduce the benchmark Selic rate to 11% from 11.5%. Brazil has taken the lead among emerging markets in trying to prevent spillover from Europe’s sovereign-debt crisis. The country’s surprise interest rate cut in August, the first in two years, has since been followed by ones in Australia and Israel. (Bloomberg)
Euroarea annual inflation is expected to be 3.0% in Nov (3.0% in Oct), according to a flash estimate issued by Eurostat. The reading was in line with economists’ expectations. (Eurostat, Bloomberg)
The euroarea seasonally-adjusted unemployment rate was 10.3% in Oct (10.2% in Sep). Economists expected no change in Oct. (Eurostat, Bloomberg)
US: Central banks prepare to distribute foreign currency at home
The Federal Reserve and five other central banks set up agreements to distribute each other’s currencies in the event of a global funding crisis. Central banks agreed to establish temporary bilateral currency swap arrangements “so that liquidity can be provided in each jurisdiction in any of their currencies should market conditions so warrant,” the Fed said yesterday in a press release, calling the agreement a “contingency measure.” The European Central Bank and the central banks of Canada, Japan, Switzerland and the UK agreed to the arrangements. (Bloomberg)
US: Central banks cut cost of borrowing USD to ease crisis
Six central banks led by the Federal Reserve made it cheaper for banks to borrow dollars in emergencies in a global effort to ease Europe’s sovereign-debt crisis. The cost for European banks to borrow dollars dropped from the highest in three years, tempering concerns about the euro’s worsening crisis after leaders said they’d failed to boost the region’s bailout fund as much as planned. The premium banks pay to borrow dollars overnight from central banks will fall by half a percentage point to 50 basis points. The so-called dollar swap lines will be extended by six months to 1 Feb 2013. The Fed coordinated the move with the European Central Bank and the central banks of Canada, Switzerland, Japan and the UK. (Bloomberg)
US stocks surge as central banks boost liquidity
Stocks surged, giving the Dow Jones Industrial Average its biggest rally since March 2009, and the euro strengthened as six central banks made additional funds available to ease strains from Europe’s debt crisis. Treasuries fell while commodities jumped. The Dow gained 4.2% to 12,045.68, while the S&P500 Index surged 4.3% to 1,246.96. The central banks of the US, the euro region, Canada, the UK, Japan and Switzerland agreed to cut the cost of providing dollar funding via swap arrangements and agreed to make other currencies available as needed. Meanwhile, China will cut the reserve requirement ratio for banks by 0.5-ppts. Data on US business activity and the employment and housing markets also topped economists’ estimates. (Bloomberg)
US mortgage applications decreased 11.7% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) survey for the week ended 25 Nov. The Refinance Index decreased 15.3% from the previous week. The seasonally adjusted Purchase Index decreased 0.8% from one week earlier. (MBA)
The index of US pending home sales increased 10.4% in Oct (-4.6% in Sep), the biggest gain since Nov 10, figures from the National Association of Realtors showed. Economists forecast a 2.0% increase. (Bloomberg)
US planned firings dropped 13% yoy to 42,474 in Nov, according to figures released by Challenger, Gray & Christmas Inc. The industries with highest job cuts were in the government (18,508), followed by food (2,368), retail (2,285), computer (2,250) and energy (2,002). (Bloomberg, Challenger, Gray & Christmas Inc)
US businesses boosted hiring in Nov by the largest gain in nearly a year, payrolls firm ADP said. The private sector added a net 206,000 jobs in Nov (+130,000 in Oct), a strong increase from the prior month, ADP said. Economists expected an increase of 130,000 in Nov. Employment in the private, service-providing sector increased 178,000 in Nov, after rising 130,000 in Oct. Employment in the private, goods-producing sector rose 28,000 in Nov. Manufacturing employment increased 7,000, offsetting the previous month’s decline, while construction employment grew 16,000. (AFP, ADP)
US productivity increased at a 2.3% annual rate in 3Q, the Labor Department said, a downward revision to its previous estimate of 3.1%. Productivity fell at a 0.1% pace in 2Q. Economists forecast productivity being revised down to a 2.6% growth rate. (Reuters)
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