China: Stocks priced for hard landing signal rally to top brokers
The lowest Chinese stock valuations since economic growth collapsed three years ago are a sign to the nation’s biggest brokerages that it’s time to buy. The Shanghai Composite Index’s 6.2% retreat this quarter sent the gauge to 11.6 times estimated profit, data compiled by Bloomberg show. It took the global financial crisis and a decline in China’s growth rate to a seven-year low of 6.8% to push valuations this low in November 2008. The Shanghai gauge rebounded 49% in the next six months. (Bloomberg)
Vietnam: Inflation accelerated in June as prices surged the most in the world after Venezuela, putting pressure on the government to reduce the budget deficit, keep interest rates high and slow credit growth. Consumer prices climbed 20.82% this month from a year earlier, according to data released by the General Statistics Office in Hanoi. That's up from a 19.78% pace in May and is the highest rate since November 2008, according to data compiled by Bloomberg. Prices rose 1.09% from May, when they gained 2.21%.(Source: Bloomberg)
UK: BOE says debt crisis biggest UK financial-stability threat
The euro-area debt crisis poses the biggest risk to the stability of the UK financial system and banks should build up capital buffers when earnings are strong, the Bank of England said. “The most serious and immediate risk to the UK financial system stems from the worsening sovereign-debt crisis in several euro-area countries,” Bank of England Governor Mervyn King said in London today as the bank published a record of the first meeting of the interim Financial Policy Committee. The FPC is an “important step” toward financial stability, he said. (Bloomberg)
EU: Vows to avert Greek default in exchange for deficit cuts
European Union leaders vowed to stave off a Greek default as long as Prime Minister George Papandreou pushes through a package of budget cuts next week, pledging to do whatever it takes to stabilize the euro economy. Greece’s next hurdle is to shepherd 78bn euros (USD111 billion) of austerity measures through parliament, after yesterday’s endorsement of the program by experts from the European Commission, the European Central Bank and the International Monetary Fund. Europe’s latest attempt to stem the debt crisis came after bonds of debt-strapped euro nations slumped and officials in the U.S. and China warned that the euro area’s failure to restore confidence threatened the world economy. (Bloomberg)
Germany: Business confidence unexpectedly improved in June, suggesting Europe's largest economy is weathering the region's worsening sovereign debt crisis and slowing global growth. The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, increased to 114.5 from 114.2 in May. Economists forecast a drop to 113.4, the median of 39 estimates in a Bloomberg News survey showed. The index remains close to a record high of 115.4 posted in February. (Source: Bloomberg)
US: Spending, manufacturing probably slowed
Consumer spending probably climbed at the slowest pace in almost a year and manufacturing cooled as dimmer job prospects and elevated commodity costs weighed on the US expansion, economists said reports will show. Purchases rose 0.1% in May, the smallest gain since June 2010, according to the median estimate of 63 economists in a Bloomberg News survey. The disaster in Japan also held back American factories this month, a survey of purchasing managers may show. The highest gasoline prices since 2008 and unemployment hovering around 9% caused households to pare spending, which may temper demand at factories already contending with higher input expenses and supply chain disruptions. (Bloomberg)
US: Fed seen buying USD300bn in Treasuries in year after QE2
The Federal Reserve will remain the biggest buyer of Treasuries, even after the second round of quantitative easing ends last week, as the central bank uses its USD2.86 trillion balance sheet to keep interest rates low. While the USD600 billion purchase program, known as QE2, winds down, the Fed said June 22 that it will continue to buy Treasuries with proceeds from the maturing debt it currently owns. That could mean purchases of as much as USD300 billion of government debt over the next 12 months without adding money to the financial system. (Bloomberg)
U.S: Economy grew at a 1.9% pace in the first quarter, marking the start of what Federal Reserve policy makers project is a temporary slowdown in growth. The revised rise in GDP matches the median forecast of economists surveyed by Bloomberg News and follows a 3.1% gain in the prior quarter, Commerce Department figures showed in Washington. The government last month estimated first-quarter growth at 1.8%. The figures also showed inflation climbed more than previously calculated. (Source: Bloomberg)
U.S: Durable goods orders climbed more than forecast in May, signaling manufacturing may be one of the first areas of the U.S. economy to rebound from a first-half slowdown in growth. Bookings for equipment meant to last at least three years rose 1.9% after a 2.7% April drop that was smaller than previously reported, data from Commerce Department showed in Washington. Revised figures from the agency also confirmed gains in GDP cooled last quarter. (Source: Bloomberg)
World: Oil reserves released to boost growth with price curbs. The decision by the U.S. and 27 allies to release oil stockpiles through the International Energy Agency for the first time since 2005 aims to reduce oil prices enough to bolster global economic growth. Brent crude, which lost 6.1% recently after the IEA announced its plan, may drop to USD100 a barrel over the next three months, according to a Bloomberg News survey of oil traders. The Paris-based agency said members will provide 60 million barrels, or 2 million barrels a day over 30 days, from the end of next week to make up for supplies choked off by an armed rebellion in Libya. (Source: Bloomberg)
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