Thursday, February 2, 2012

20120202 1026 Local & Global Economic Related News.

Economy: Malaysia, Australia to sign trade pact in May
Minister of International Trade and Industry Datuk Seri Mustapa Mohamed  said the  Malaysia-Australia Free Trade Agreement (MAFTA) will be signed this May after the  conclusion of the talks on the agreement, slated in March, He said the much-delayed  agreement, which was mooted in 2005, would be concluded this year as per aspirations of Prime Minister Datuk Seri Najib Tun Razak and his Australian counterpart, Julia Gillard, when  the latter paid an official visit to Canberra. (Bernama)

Economy: Bank Negara keeps key rate at 3%
Bank Negara Malaysia has maintained the Overnight Policy Rate (OPR) at  3%. The central  bank said in the recent months, global economic and financial conditions had deteriorated  following the escalation of the sovereign debt crisis in Europe, the ongoing fiscal  consolidation and the significant policy uncertainties. In the domestic economy, it said, the  latest indicators pointed towards continued expansion in  4Q 2011. The central bank said  growth was driven by sustained domestic consumption and investment activities, while the  external sector showed signs of moderation. It added that the economy is expected to  continue to expand, underpinned by sustained private sector economic activity and further  reinforced by public sector spending. (Business Times)


Indonesia: Inflation eases, providing scope to keep rates low
Indonesia’s inflation slowed for a fifth straight month in January, bolstering the case for the central bank to keep interest rates low as global growth falters. Consumer prices rose 3.65% last month from a year earlier after climbing 3.79% in December. (Bloomberg)

South Korea: Exports decline on Europe as inflation cools
South Korea’s exports unexpectedly fell for the first time in more than two years and inflation moderated to the slowest pace in 12 months, boosting the case for holding off on interest-rate increases. Overseas shipments dropped 6.6% in January from a year earlier after a revised 10.8% rise in December while consumer prices rose 3.4% from a year earlier, the slowest since Jan 2011 when they gained at the same speed. (Bloomberg)

China: Manufacturing holds up against global slowdown
Chinese manufacturing indexes rose in January as the world's second-biggest economy withstood weaker exports driven by Europe's debt crisis and a government-induced property slowdown. The official purchasing managers' index increased to 50.5 from 50.3 in December. (Bloomberg)

India: Manufacturing up at fastest clip in 8 months
India's manufacturing sector in January hummed along at its fastest clip in eight months, fuelled by new order growth. The HSBC India Manufacturing Purchasing Managers' Index, a key measure of factory production, registered 57.5 in January, up from 54.2 in December accelerating for the second straight month. (Bloomberg)


EU: ECB loan collateral plan said to be avoided by some Euro members
The ECB’s plan to accept more bank loans as collateral may not be used by all euro-region  nations, threatening to fragment the rules applying to bank funding operations, said 2 euroarea officials with knowledge of the discussions. The initiative is likely to be implemented on  a voluntary basis by national central banks and several of them may opt out, said the  officials, who declined to be identified because the information is confidential. Germany’s  Bundesbank has indicated it may be among those to shun the measure, arguing the country’s  banks don’t need to borrow more from the ECB. An ECB spokesman declined to comment. (Bloomberg)

EU: Leaders sign stricter fiscal pact
EU leaders endorsed a treaty aimed at strengthening accountability and keeping a closer eye  on member nations’ efforts to rein in overspending and resolve the region’s debt crisis. European Council President Herman Van Rompuy said  the treaty is all about more  responsibility and better surveillance. Every country that signs it commits to bringing in a  ‘debt brake’ or ‘golden rule’ into its own legislation, and will do so at constitutional or  equivalent level. He added that the new voting rules and an automatic correction mechanism  will enforce compliance more effectively. 25 member states, including 17 euro-zone  countries, are expected to sign the fiscal compact when the leaders next gather in Mac. Only  UK and Czech Republic will not be signatories. The treaty will take effect once at least 12  euro nations have ratified it. (MarketWatch)

EU: Draghi stuck with Trichet’s bond plan
The  ECB’s bond program, dubbed “temporary” by Jean-Claude Trichet, shows no signs of  ending even after 219bn euros ($289bn) of purchases augmented by twice as much in 3 year  loans. The ECB, led by Mario Draghi since he replaced Trichet on Nov 1, has bought bonds for  its Securities Market Program every week since Aug. (Bloomberg)

UK: Factory gauge rose to 8 month high in Jan
A UK manufacturing index jumped to an 8 month high in Jan and unexpectedly returned to  growth after a quarter of contraction as production rebounded. The factory gauge, based on  a survey by Markit Economics and the Chartered Institute of Purchasing and Supply, rose to  52.1 from a revised 49.7 in Dec. The median forecast of 28 economists in a Bloomberg News  survey was for a reading of 50, the level that divides expansion from contraction. (Bloomberg)

Germany: Unemployment fell in Jan German unemployment dropped more than economists forecast to a 2 decade low in Jan,  bolstering economic growth as the euro region’s fiscal crisis prompted companies from Spain  to Greece to cut jobs. The Nuremberg-based Federal Labor Agency said that the number of  people out of work fell a seasonally adjusted 34,000 to 2.85m. Economists predicted a  decline of 10,000, the median of 32 forecasts in a Bloomberg News survey showed.  (Bloomberg)

France: Consumer spending falls as jobless claims surge
French consumer spending fell in Dec as surging joblessness and concern about looming tax  increases prompted households to cut back. National statistics office Insee said  that  spending fell 0.7% from Nov, when it fell 0.1%. Economists expected an increase of 0.2%,  according to the median of 18 estimates gathered by Bloomberg News. Household purchases  have hovered around zero since Augand were down 3.1% in Dec from a  year earlier,  underlining consumer pessimism as Europe’s second-largest economy tips into recession.  Jobless claims jumped to as 12-year high of 29,700 in Dec as President Nicolas Sarkozy  prepared to implement the second-round of tax increases and spending cuts in less than half  a year. (Bloomberg)


Greece: Bondholders said set to get GDP sweetener in debt swap
Greek bondholders may get a sweetener tied to a revival in economic growth to ease the impact of accepting a lower interest rate on the new bonds, sources said. In discussions late last week, creditors lowered their demands for an average coupon on the new 30-year securities they would receive to as little as 3.6% from 4.25% after European officials demanded they take steeper losses. While the move would lead to an estimated loss of 70% or more for investors, adding a GDP warrant – which would pay bondholders more if the Greek economy rebounds – would trim the loss in net present value terms by an estimated 0.5 to 3ppts. (Bloomberg)

Portugal: Borrowing costs fall after ECB action
Portugal’s borrowing costs declined at a successful auction of EUR1.5bn of shorter-term government debt, after the ECB intervened in the country’s sovereign debt market earlier this week to subdue soaring bond yields. The six-month notes due in July 2012 were issued at an average yield of 4.463%, compared with an average yield of 4.74% at a previous auction on 18 Jan. (Bloomberg)

US: Construction spending climbs most in 4 months
Construction spending in US rose in December at the fastest pace in 4 months, reflecting broad-based gains that signal the industry is stabilizing. Building outlays increased 1.5%, the biggest gain since August. (Bloomberg)

US: Treasury plans USD72bn debt as negative yield sale seen
The US Treasury Department said it plans to sell USD72bn in notes and bonds at next week’s quarterly refunding, while a Wall Street advisory panel urged the government to allow negative yields at bill auctions. “In the coming weeks there will be a seasonal increase in borrowing needs ahead of the April 2012 tax season,” the Treasury said in a statement today. “Treasury plans to address this seasonal borrowing need through increases in regular bill auction sizes and cash management bills.” (Bloomberg)

US: Manufacturing bolsters global expansion
Manufacturing in US grew in January at the fastest pace in seven months, adding to signs of a global pickup from Germany to China. The Institute for Supply Management’s index climbed to 54.1, from 53.1 in December. (Bloomberg)

US: Regulators weigh Volcker exemption for sovereign debt
U.S. banking regulators are exploring whether they can exempt sovereign debt from the  Dodd-Frank ban on proprietary trading after foreign governments complained that the rule  could raise borrowing costs and impede the flow of capital. 5 regulatory agencies are taking  public comments on a proposed version of the so-called Volcker rule, which was included in  the 2010 financial regulatory overhaul to ban deposit-taking banks from trading with their  own money. While foreign government bonds would fall under the rule as proposed, U.S.  government debt would be exempt. Officials from Canada, Japan, and UK have sent letters to  the Treasury Department and regulators saying the measure would harm their ability to raise  money. (Bloomberg)

US: Home prices fall for third straight month
U.S. home prices fell for a third straight month in nearly all cities tracked by a major index.  The declines show that most homeowners are not reaping the benefits from some signs of  an improving housing market. The S&P/Case-Shiller home-price index shows prices dropped  in Nov from Octin 19 of the 20 cities tracked. The biggest declines were in Atlanta, Chicago  and Detroit. Phoenix was the only city to show an increase. Prices declined in 18 of the 20  cities in Nov compared to the same month in 2010. Only Washington and Detroit posted  year-over-year increases. The decline partly reflects the typical fall slowdown after the peak  buying season. Still, prices have fallen 33% nationwide to 2003 levels. (Associated Press)

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