Asian economies are withstanding Europe’s debt crisis so well that some investors are positioning for credit-rating upgrades in the region. Five-year credit-default swaps for China, South Korea, Indonesia, Malaysia, the Philippines and Thailand climbed an average 63 bpts to 161 this year, while contracts for 17 eurozone countries, excluding Greece, jumped 118 to 301. Moody’s Investors Service is watching the trading in the swaps, which protect against non-payment, and how Asia copes with capital flows as it weighs rating changes, said Thomas Byrne, a senior vice president at Moody’s in Singapore. (Bloomberg)
The eurozone's economy edged up 0.2% qoq in 3Q (+0.2% in 2Q and +0.8% in 1Q), the Eurostat said. On a yoy basis, gross domestic product (GDP) rose by 1.4% (+1.7% in 2Q). The readings matched economists’ expectations. (Xinhua, Bloomberg)
Standard & Poor’s put Germany, France and 13 other euro-area nations on review for a downgrade, saying “continuing disagreements among European policy makers on how to tackle” the region’s debt crisis risk damaging their financial stability. (Bloomberg)
Consumer prices in the Philippines rose 4.8% yoy in Nov, following a 5.2% gain in Oct. Core inflation rose 3.7% yoy (+3.9% in Oct). Economists had expected a 4.9% headline increase. (Bloomberg)
Forex reserves in Indonesia declined to US$111.32bn in Nov, a 2.3% decline from Oct. (Bloomberg)
Thailand’s outstanding public debt as of the end of Sep totaled THB4.44tr, or 41.66% of GDP, a THB176.75bn increase from Aug, Public Debt Management Office director Chakkris Paraphanthakul said. (Bangkok Post)
Emerging East Asia — the ASEAN economies plus China, Hong Kong, South Korea and Taiwan — is expected to grow 7.2% next year (7.5% in estimate as at Sep) after growth of 7.5% this year, the ADB said in its Asian Economic Monitor on Tuesday. (Reuters)
Corelogic’s US home price index fell 1.3% mom in Oct and 3.9% yoy (3.8% in Sep). Excluding distressed sales, prices were down 0.5% yoy. (Reuters)
Australia: RBA's cut reflects lack of confidence in Europe steps
Australia executed its first back-to-back interest-rate cut since 2009 and the Asian Development Bank cited escalating risks to its growth outlook, signaling lack of confidence in the region that Europe’s leaders have done enough to stem the sovereign-debt crisis. Reserve Bank of Australia Governor Glenn Stevens lowered the overnight cash-rate target by a quarter percentage point, to 4.25%, confounding the forecasts of 12 of 25 economists surveyed by Bloomberg News. Philippine and Indonesian officials in the past day have said their central banks are also prepared to reduce borrowing costs. (Bloomberg)
Germany: Factory orders surge on rebound in export demand
German factory orders surged the most in 19 months in October after three straight declines, led by a rebound in demand from abroad. Orders, adjusted for seasonal swings and inflation, jumped 5.2% from September, when they dropped 4.6%, the Economy Ministry in Berlin said. Economists forecast a gain of 1%, according to the median of 34 estimates in a Bloomberg News survey. In the year, orders rose 5.4% when adjusted for work days. (Bloomberg)
Euro: S&P places 15 Euro nations on warning for credit downgrade
Standard & Poor’s said Germany and France may be stripped of their AAA credit ratings as the debt crisis prompts 15 euro nations to be put on review for possible downgrade. The euro area’s six AAA rated countries are among the nations to be placed on a negative outlook, and their credit ratings may be cut depending on the result of a summit of European Union leaders on 9 Dec, S&P said. The euro reversed its gains and US Treasuries rose earlier yesterday after the Financial Times reported that the credit-ranking firm planned to reduce six AAA outlooks. “Systemic stress in the eurozone has risen in recent weeks and reached such a level that a review of all eurozone sovereign ratings is warranted,” S&P said in a statement. (Bloomberg)
US: Drop in joblessness is early sign of coming shift
The drop in US unemployment so far this year may be an early glimpse of what’s to come as the workforce ages. The jobless rate, which was 9.4% in December 2010, declined to 8.6% last month, according to Labor Department data issued 2 Dec. The report also showed payrolls have climbed by 132,000 a month on average in 2011, around the pace most economists say would keep the rate stable as the population grows. (Bloomberg)
US manufacturers are more optimistic about sales, spending and hiring for next year than service companies, a sign factories will remain at the forefront of the economic expansion, according to the Institute for Supply Management. Purchasing managers at factories anticipate sales will grow 5.5% next year and capital investment will increase 1.9%, the group’s semiannual forecast showed. Revenue and spending will increase at a slower pace among service providers. (Bloomberg)
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