US: Fed signals no need to ease more unless growth falters
The Federal Reserve is holding off on increasing monetary accommodation unless the US economic expansion falters or prices rise at a rate slower than its 2% target. According to minutes of their Mar 13 meeting, a couple of members indicated that the initiation of additional stimulus could become necessary if the economy lost momentum or if inflation seemed likely to remain below 2%. That contrasts with the assessment at the FOMC’s Jan meeting in which some Fed officials saw current conditions warranting additional action before long. (Bloomberg)
US: Factory orders rose 1.3% in February on capital goods
Orders to US factories climbed in Feb for the third month in the last four, boosted by demand for business equipment. Figures from the Commerce Department showed that bookings rose 1.3% after a revised 1.1% decline in Jan. The median of 60 economists’ projections in a Bloomberg News survey called for a 1.5% advance. Orders excluding transportation equipment increased by the most in 5 months. Demand for new vehicles and business investment are sustaining production gains at American factories, which account for about 12% of the world’s largest economy. At the same time, slower growth in Europe and China show that sales overseas remain a risk. (Bloomberg)
US domestic auto sales moderated to 10.9m units in Mar (11.4m in Feb), falling short of consensus expectations of 11.3m. Total vehicle sales similarly fell 4.8% to a 14.4m rate in Mar (15.1m in Feb), worse than the consensus of 14.7m. (Bloomberg)
Minutes of the US Federal Reserve's latest policy meeting showed the bank's nervous agnosticism about the recovery, with policymakers reticent about declaring victory or launching new stimulus unless growth falters or prices rise slower than its 2% target. (Bloomberg, AFP)
UK: Construction growth accelerates to fastest in 21 months
UK construction expanded at the fastest pace in 21 months in Mar, adding to signs the economy returned to growth in the first quarter. Markit Economics Ltd. and the Chartered Institute of Purchasing and Supply said in a report that the gauge of building activity rose to 56.7 from 54.3 in Feb. The median forecast in a Bloomberg News survey of nine economists was 53.4. A reading above 50 indicates expansion. Markit said confidence at companies increased to a 22-month high. Chris Williamson, chief economist at Markit said that the good weather appears to have led to a surge in demand for construction projects in Mar, adding to the recent flow of good news which suggests the economy will have skirted a recession. (Bloomberg)
Eurozone producer price inflation rose 0.6% mom in Feb (a revised 0.8% in Jan), above expectations for a 0.5% increase. On a yoy basis, the measure rose 3.6% (3.8% in Jan), higher than the 3.5% expected by economists. (Eurostat)
Asia Pacific: Syndicated loan volume drops 39% in 1Q 2012
Syndicated loan volume in Asia Pacific (excluding Japan) reached US$45.15bn via 157 deals in 1Q 2012, marking one of the lowest volumes and deal counts recorded for first quarters. According to a Thomson Reuters LPC report, Japan was the only market that seemed resilient to market woes -- its volume climbed to US$108bn in first quarter 2012 from US$83.53bn a year earlier. The report said Australia and New Zealand Banking Group (ANZ) topped Asia Pacific (excluding Japan) Mandated Arranger League Table. Mizuho Corporate Bank led the Mandated Arranger League Table for Asia (excluding Australia and Japan), followed by OCBC Bank and Bank of Tokyo-Mitsubishi UFJ. (Bernama)
China: Economy grows 8.4% in estimate cited by NDRC official
China’s economy may have expanded about 8.4% in the first quarter, the least since the first half of 2009, according to an estimate given by an official 10 days before the data are due. Zhang Xiaoqiang, vice chairman of the National Development and Reform Commission, cited relevant China research institutes’ initial figures for the estimate and predicted a gain of about 3.5% in consumer prices. He spoke Tuesday during a panel discussion at the Boao Forum for Asia, a gathering of government and business leaders on China’s tropical island of Hainan. The growth figure compares with the 8.3% median estimate of 28 economists surveyed by Bloomberg News. The fifth straight slowdown in quarterly growth will underscore concerns that weakness in the Chinese economy is set to limit a global expansion already capped by Europe’s austerity measures. (Bloomberg)
China: May allow more overseas investment overseas
China may loosen overseas investment rules for private investors, the country's central bank chief said on Tuesday, less than a week after the government gave the go-ahead for pilot financial reforms in a coastal city. China's State Council (or cabinet) last week said it would study allowing direct investments overseas by residents in the eastern Chinese city of Wenzhou as part of a general financial reform zone experiment. That was seen as a significant step toward liberalising capital account transactions. Speaking at the 2012 Boao Forum for Asia on China's southern Hainan island, People's Bank of China (PBoC) head Zhou Xiaochuan said China encouraged capital outflows, which would help reduce imbalances caused by net capital inflows. (Reuters)
China’s non-manufacturing PMI improved to 58 in Mar from 57.3 in Feb. (Bloomberg)
The China Securities Regulatory Commission increased the quotas for qualified foreign institutional investors to US$80bn from US$30bn, according to a statement on its website. Offshore investors will also be allowed to pump an extra Rmb50bn of local currency into the country, up from Rmb20bn. (Bloomberg)
Chinese Premier Wen Jiabao said that China's state-controlled banks are a "monopoly" that must be broken via allowing “private capital to flow into the finance sector.” (WSJ)
Japan: Monetary base slides for first time since 2008
Japan’s liquidity supply dropped in Mar for the first time in more than 3 years, fueling politicians’ complaints that the central bank should be doing more to end deflation. Bank of Japan’s report showed that the monetary base fell 0.2 percent from a year earlier after climbing 11.3 percent in the previous month, a Bank of Japan. The average amount outstanding was 112.46 trillion yen ($1.37 trillion). (Bloomberg)
Japan: Rejection of Bank of Japan nominee by LDP adds pressure to ease
Japan’s biggest opposition party said it will reject Prime Minister Yoshihiko Noda’s central bank nominee as lawmakers press for a more aggressive monetary policy to spur growth and end deflation. Liberal Democratic Party officials agreed Tuesday to oppose BNP Paribas SA economist Ryutaro Kono joining the policy board, Fumio Kishida, head of the party’s Diet affairs committee, said in Tokyo. Lawmakers’ complaints, a rebounding yen and pessimism among large manufacturers may add pressure on the Bank of Japan to loosen monetary policy further this month. Governor Masaaki Shirakawa and his officials have pledged “powerful easing” until 1% inflation is in sight after increasing asset purchases by 10 trillion yen ($122bn) on Feb 14. (Bloomberg)
Japan: Auction demand at 4-month low signals yield gain
The lowest auction demand in four months for Japan’s 10-year debt foreshadows a gain in yields this fiscal year as the central bank’s monetary easing curbs demand for yen-based assets. The JPY2.1trn (USD26bn) sale of the securities was the first debt offering in the year started 1 April and drew bids valued at 2.73 times the amount on offer. That’s the lowest ratio since the auction on 1 Dec and below the average of 3.08 for the past 10 sales. Benchmark yields rose two basis points to 1.03%, the highest since 21 March. The bid-to-cover ratio for 10-year US debt has been over 3 at every sale this year. (Bloomberg)
Australia: Holds key rate at 4.25% as domestic growth weakens
Australia’s central bank signalled it may resume cutting interest rates as soon as next month if weaker-than-forecast growth slows inflation, sending the local currency and bond yields lower. “The board judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation, before considering a further step to ease monetary policy,” Governor Glenn Stevens said in a statement after leaving the overnight cash-rate target at 4.25%. (Bloomberg)
Indonesia plans to impose a 25% export tax on coal and base metals this year, jumping to 50% in 2013, an industry ministry official said, as the government looks to boost domestic investment and take a bigger slice of mining profits. (Reuters)
The Bank Indonesia's retail sales index was down to 11.3% yoy to 109.7 in Feb, and 5.7% mom lower than a revised 116.3 in Jan, due to fewer days in the month. Sales were mainly driven by household goods. (Reuters)
Indonesia’s Central Bureau of Statistics (BPS) said the month of Oct is the last chance for the government to raise the price of fuel oil (BBM) subsidy this year, as inflation is relatively stable due to the harvest season. (IFT)
Inflation in Thailand rose to 3.45% yoy in Mar (3.35% in Feb), outpacing analyst forecasts of 3.2%. Core CPI rose 2.77% yoy in Mar, slightly higher than the 2.72% growth posted in Feb. (Bloomberg)
Singapore’s PMI stood at 50.2 points in Mar, slightly below Feb’s 50.4 but still above the key 50-point level that shows an increase in activity. A separate PMI for the electronics sector rose to 51.5 in Mar from 51.0 in Feb due to further expansion in new orders from overseas and domestic markets. (Reuters)
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