20100526 1126 Global Economic News.

The Federal Reserve doesn’t intend to sell any of its assets, including more than US$1.1trn in mortgage-backed securities, until after it begins raising interest rates, the central bank said in a report to Congress. “The Federal Reserve currently does not anticipate that it will sell any of its securities holding in the near term, at least until after policy tightening has gotten under way and the economy is clearly in a sustainable recovery,” the Fed in its annual report, which was posted on its Website. (Bloomberg)

US home prices fell in the first quarter of 2010 but are still higher than they were a year ago. According to the S&P/Case-Shiller nation-wide index, home prices fell 3.2% qoq in 1Q but have still managed to climb 2% yoy. The index continued to show weakness despite very low mortgage interest rates and tax incentives to encourage home purchases. Two other indexes tracked by Case-Shiller registered declines for the month of March, 0.5% for its index of 20 major cities and 0.4% for the 10-city index. (CNNMoney)

U.S. consumers are much less pessimistic, rising by 6.6pts to 63.3 in May (57.7 in Apr), according to the Conference Board's measure of consumer confidence index. Market had expected a reading of 59. The assessment of the jobs market has improved for a third month with 43.6% describing jobs as currently hard to get (47.3% in Feb). 20.4% of total respondents see more jobs six months from now (17.7% in Apr) and fewer see fewer jobs ahead, at 17.7% (19.9% in Apr).

• The Conference Board’s measure of present conditions increased to 30.2 this month, the highest level since December 2008. 
• The gauge of expectations for the next six months surged to 85.3, the highest point since August 2007, four months before the recession began. (Bloomberg)

The Federal Reserve will probably transfer record earnings exceeding US$70bn to the US Treasury Department this year (US$47.4bn in 2009, US$15.7bn higher than in 2008) on income from assets including mortgage-backed securities, according to the Congressional Budget Office. “The Federal Reserve’s actions to stabilize the financial markets are likely to significantly increase the amount of its remittances over the next few years,” the CBO said. The CBO report estimated that the value of subsidies from the Fed’s aid during the financial crisis was US$21bn. The biggest subsidies occurred through the Term Asset- Backed Securities Loan Facility, or TALF, where subsidies totaled US$13.0bn. (Bloomberg)

The German Finance Ministry proposes to ban the so-called naked short selling of all shares of German companies listed on German exchanges, as well as naked short sales of euro region bonds admitted for trading on German exchanges. The proposed law would also ban naked sales of some credit default swaps on euro region bonds. The discussion paper also aims to ban certain euro currency derivatives. (Bloomberg)

The U.K. economy grew more than previously estimated, with real GDP growth of 0.3% qoq in 1Q10 (0.2% previously estimate) as rebounding investment and the biggest jump in manufacturing for four years strengthened the recovery. That matched the median forecast. Manufacturing surged 1.2%, the most since the first quarter of 2006. (Bloomberg)

European industrial orders jumped 5.2% in March (1.9% in Feb), the most in almost three years, led by surging demand for capital goods such as machinery. That’s the biggest gain since June 2007. Economists forecast an increase of 2.5%. March’s industrial orders rose 20% yoy. (Bloomberg)

Bank of Korea board members voted unanimously to keep the benchmark interest rate unchanged at 2.0% in April, even as one urged a pre-emptive increase in borrowing costs and two wanted to signal the policy stance may change. The central bank will maintain its “easy policy,” it said in minutes of the April 9 meeting released yesterday. The bank also kept the rate at a record-low 2% at its latest meeting on May 12. (Bloomberg)

A Thai court issued orders on Tuesday, May 25 to arrest former Prime Minister Thaksin Shinawatra on terrorism charges in connection with riots over the past two months that were the worst in the country's modern history. Armed with the arrest warrant, Thai prosecutors and the Foreign Ministry will launch a global hunt for the fugitive telecoms tycoon, a top government official said. Thaksin was last believed to be in France, but he keeps his location secret.

• "The court said there was enough evidence to believe that Thaksin was the mastermind, having played a significant role in instructing and manipulating the incidents," Department of Special Investigations chief Tharit Pengdit said, referring to the riots. 
• Government officials say Thaksin funded the 10-week, anti-government protests to the tune of about US$1.5m a day and is believed to have organised the smuggling of arms and fighters from Cambodia. (TheEdge)

The Philippine economy probably expanded at the fastest pace in more than a year last quarter as remittances boosted consumer spending and exports surged, reducing the need for record-low interest rates. Gross domestic product increased 4.4% yoy in 1Q10 (+1.8% in 4Q09), according to the median forecast surveyed. The government will release the report at 10 a.m. tomorrow in Manila. (Bloomberg)

South Korea's sentiment index advanced to 111 in May (110 in Apr) as the nation’s economy strengthened. This was the first increase since Oct 09 when it reached a sevenyear high of 117. A number exceeding 100 indicates optimists outnumber pessimists. (Bloomberg)

Singapore’s visitor arrivals surged 20.4% yoy to 938,000 in April as a recovery in the global economy encouraged travel and the island’s two casino-resorts attracted tourists to their roulette tables, shops and hotels. The arrivals were the highest ever for April, and followed four months of record gains. Singapore aims to lure 17m visitors and reach annual tourism revenue of S$30bn by 2015, helped by casino resorts run by Las Vegas Sands Corp. and Genting Singapore Plc. The island may get as many as 12.5m visitors this year and tourism receipts may reach as much as S$18.5bn, Senior Minister of State for Trade and Industry S. Iswaran said. (Bloomberg)

Vietnam’s trade deficit narrowed 35.0% mom to US$750.0m in May (US$1.2bn in Apr) as exports rebounded from US$5.3bn to US$6.1bn in May, buoyed by a reviving global economy and a weaker currency. That brings the deficit for the year to US$5.4bn, more than four times the shortfall of US$1.1bn for the same period in 2009. For the first five months of 2010, exports increased 12.6% yoy to US$25.8bn. (Bloomberg)