Malaysia: BNM holds rate on inflation risk
Malaysia left interest rates unchanged for a fifth straight meeting as economic growth risks diminished and rising oil prices revive inflation pressure. Bank Negara Malaysia Governor Zeti Akhtar Aziz kept the benchmark overnight policy rate at 3%. The nation joined Indonesia and South Korea in holding rates as easing concern of a euro-area meltdown and higher oil prices give policy makers room to pause from adding stimulus. The IMF predicts economic growth may slow to 4% in 2012, and Zeti said last month the central bank will keep interest rates “accommodative” as the outlook for the global economy remains uncertain. (Bloomberg)
China’s consumer price inflation slowed to 3.2% yoy in Feb (4.5% in Jan), while producer price inflation was unchanged from a year ago (0.7% in Jan). (Bloomberg)
China’ industrial production rose 11.4% yoy in Feb (13.9% in Jan), lower than the 12.3% growth called by economists. (Bloomberg)
China’s urban fixed asset investment rose 21.5% yoy in Feb (23.8% in Jan). (Bloomberg)
Retail sales in China grew 14.7% yoy in Feb, moderating from 17.1% in Jan. (Bloomberg)
New yuan loans in China rose Rmb710.7bn in Feb (Rmb 738.1bn in Jan), lower than the market forecast of Rmb750bn. Money supply (M2) increased 13% yoy in Feb (12.4% in Jan). (Bloomberg)
China: Biggest trade shortfall since 1989 on Europe turmoil
China had its largest trade deficit since at least 1989 last month as Europe’s sovereign-debt turmoil damped exports and imports rebounded after a weeklong holiday, with the shortfall standing at USD31.5bn. Imports rose 39.6% y-o-y, after a 15.3% slump in January, while exports increased 18.4%.Data in the first two months are distorted by the timing of the Lunar New Year holiday, which fell in January this year and February in 2011. Including seasonal adjustments, exports in February rose 4% y-o-y while imports gained 9.4%. (Bloomberg)
India: RBI unexpectedly cuts reserve ratio to ease cash shortage
India’s central bank unexpectedly cut the amount of deposits lenders need to set aside as reserves to ease a cash squeeze in the banking system that threatens to deepen an economic slowdown. The Reserve Bank of India (RBI) reduced the cash reserve ratio to 4.75% from 5.5% and will add INR480bn (USD9.6bn) into lenders. The unscheduled step before a 15 Mar policy review underscores the RBI’s concern that a shortage of cash in the banking system will hurt the economy. (Bloomberg)
Credit growth in the Philippines eased to 16.6% yoy in Jan (16.4% in Dec), while bank lending net of RRPs eased to 19.1% yoy in Jan from 19.3% in Dec. Money supply (M3) rose 7.2% in Jan (6.3% in Feb) (Bloomberg)
Thailand’s foreign exchange reserves declined to US$180bn in the week ending 2 Mar, from US$180.6bn the previous week. (Bloomberg)
Investors holding 85.8% of Greece’s private debt have agreed to participate in the country‘s €206bn debt restructuring, clearing the way for Athens to complete the world‘s largest ever sovereign debt default. Participation would rise to 95.7% after collective action clauses are activated to force hold-out investors to participate. (FT)
The Greek economy shrank by 7.5% in 4Q11, worse than the previous estimate of 7%, with the economy in recession for a fifth year, official data showed. (AFP)
The International Monetary Fund intends to contribute €18bn in fresh funds to the second aid package for Greece, representing 14% of the €130bn in total – less than its 27% (€30bn) aid in Greece‘s initial bailout in May 2010. This comes after Greece announced that a large majority of the country's private creditors had agreed to a debt swap aimed at erasing €107bn worth of debt. (AFP, Bloomberg)
EU: Greek credit swaps payouts to be expedited after trigger ruling
A committee of credit-default swaps traders will expedite an auction to settle about USD3bn of contracts tied to Greece after the nation took steps to force investors to participate in the biggest sovereign-debt restructuring in history. The viability of credit swaps as a hedge for about USD257bn of government debt was questioned after ISDA rejected a request on 1 Mar to declare whether the swaps were triggered because the restructuring effectively subordinated private investors to the European Central Bank. Greece’s use of collective action clauses (CAC), in its debt restructuring triggers payouts on the contracts, and investors with 95.7% of Greece’s privately held bonds will participate in the swap. (Bloomberg)
EU: German January exports rebound while February inflation accelerates
German exports rebounded in January as the global economy showed signs of recovery. Exports, adjusted for work days and seasonal changes, increased 2.3% m-o-m, when they dropped a revised 4.4%. Imports increased 2.4% after declining 3.9%. The trade surplus widened to EUR13.1bn from EUR12.9bn in December. Meanwhile, inflation in Germany accelerated in February as tensions in the Middle East fueled oil prices. Inflation, quickened to 2.5% from 2.3% in January. (Bloomberg)
US: Payroll gain caps job market’s best six months since 2006
Employers in the US took on more workers than forecast in Feb, completing the best six months for payroll growth since 2006. The 227,000 increase followed a revised 284,000 gain in Jan that was bigger than first estimated. The jobless rate held at a three-year-low of 8.3% even as 476,000 more workers sought employment. Some 1.2m jobs were created in the past six months, the most since the same period ended May 2006. Employment climbed by 428,000 in February, while the labor force rose by 476,000. (Bloomberg)
US: Trade deficit widens to largest since October 2008
The trade deficit in the US widened in January to the largest since October 2008 as imports rose to a record high. The gap increased 4.3% to USD52.6bn, more than forecast, from a revised USD50.4bn in December. Exports of capital goods, as well as cars and automobile parts, climbed to a record. Imports may keep rising as labor market gains put consumers in a better position to continue spending while businesses rebuild stockpiles and replace outdated equipment. Rising energy costs may also keep the trade gap widening. (Bloomberg)
The US Federal Reserve’s extension of the average maturity of its holdings under Operation Twist is comparable to its two rounds of asset purchases in lowering borrowing costs, and may lower the Treasury 10-year note yield by about 0.85%, according to the Bank for International Settlements. (Bloomberg)
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