Russia: Central bank kept its key policy rates unchanged for a sixth month and lowered the cost of currency swaps to improve access to ruble liquidity. Bank Rossii held the refinancing rate at 8%, a quarter point off the record low. The overnight auction-based repurchase rate stays at 5.25% and the overnight deposit rate will be kept at 4%. (Source: Bloomberg)
China: Foreign investment almost unchanged at USD 9.23b in May as the economy cooled, the yuan weakened, and Europe's debt crisis roiled financial markets. The number was 0.05% YoY higher, the Ministry of Commerce said on its website. That compared with a 0.7% YoY decline in April. China may be set for the weakest economic growth in 13 years as the government struggles to reverse a slowdown without reigniting inflation or adding to bad-loan risks for banks. Foreign investment into the world's second-biggest economy began to slide in November last year in an echo of declines during the financial crisis of 2008 and 2009. (Source: Bloomberg)
Japan: The Bank of Japan kept the size of its asset-purchase fund unchanged and said it will pay "particular" attention to global markets. The central bank kept its asset-purchase fund at JPY 40t (USD 507b) and a credit lending program at JPY 30t. (Source: Bloomberg)
Japan: Noda ends nuclear freeze, risking backlash at polls. Prime Minister Yoshihiko Noda ended Japan's month-long freeze on nuclear power, approving a reactor restart that combined with a tax increase may undermine his political support. Two reactors at Kansai Electric Power Co.'s Ohi nuclear plant can be operated safely, Noda declared June 16 after meeting with three Cabinet ministers who share approval authority. The utility, which serves the USD 1t economy of Japan's second-biggest urban region, said it would immediately begin work to start one reactor. (Source: Bloomberg)
Philippines: Remittances increased at a faster pace in April, aiding domestic consumption and helping sustain economic growth. The funds rose 5.3% YoY to USD 1.7b, the central bank said. Remittances grew 5% YoY in March, according to previously reported data. (Source: Bloomberg)
Global: Europe gets emerging market crisis ultimatum
European leaders attending the G-20 summit in Mexico received an ultimatum to stop stoking market uncertainty and step up their fight against the financial crisis posing the biggest threat to the world economy. While China pressed world leaders to provide a signal of “confidence” to markets, Indonesian President Susilo Bambang warned that the turmoil in euro area was spilling over to Southeast Asia’s largest economy and threatened to drive up oil prices. “I hope that our European colleagues will reach an agreement on rigorous methods to manage the crisis,” he said. (Bloomberg)
Greece: Pro-bailout party leads in election tally
The pro-bailout New Democracy party is the projected winner of Sunday’s critical Greek parliamentary elections, increasing the probability that Greece will remain in the euro zone. If the conservative political party can hold its lead, it must then form a governing coalition among the other parties on Sunday’s ballot. (Bloomberg)
France: Hollande’s Socialists to win absolute parliament majority
French President François Hollande’s Socialists won an absolute parliamentary majority on Sunday, strengthening his hand as he presses Germany to support debt-laden euro zone states hit by austerity cuts and ailing banks. The Socialist bloc secured between 296 and 321 seats in the parliamentary election runoff, according to reliable projections from a partial vote count, comfortably more than the 289 needed for a majority in the 577-seat National Assembly. (National Post)
France: Seeks EUR120bn package, euro bonds later
France wants the EU to agree before the end of 2012 on growth-boosting measures worth EUR120bn, the weekly Journal du Dimanche reported, citing a proposal circulated by France ahead of an end-June summit. It said that France has accepted Germany's rejection of its call to issue mutualized debt in the euro bloc and now agreed that so-called euro bonds were a project to be looked at over a 10-year time frame. (Bloomberg)
Spain: Bond yields surge after aid request
Spain’s bond yields surged the most since the euro was created in 1999 this week after the nation requested aid for its banks and asked the ECB for more financial support. Bonds slumped amid concern Germany will need to increase borrowing to support its struggling neighbors as Moody’s cut Spain’s credit rating to one step above junk. Spanish 10-year yields approached 7% after Prime Minister Mariano Rajoy published a letter to EU leaders on 13 June saying the ECB should help countries trying to shore up their finances. (Bloomberg)
UK: Trade deficit widens
UK posted its second largest global goods trade deficit on record in April, including its biggest ever trade gap with the EU, as exports fell at the sharpest rate for almost six years. The official figures suggest the weakness of demand for UK exports, particularly from mainland Europe, is hampering the country's efforts to trade its way out recession. The world goods trade deficit widened much more than expected to GBP10.1bn in April from GBP8.7bn in March, only slightly smaller than the record GBP10.2bn deficit recorded last Sept. (Bloomberg)
US: Signs of weakness mount as confidence, output fall
Industrial production unexpectedly fell and consumer confidence slid, adding to evidence of US economic weakness days before Federal Reserve policy makers meet to decide whether more stimulus is needed. Output at factories, mines and utilities decreased 0.1% last month after a revised 1% gain in April. The Thomson Reuters/University of Michigan index of consumer sentiment for June fell to 74.1, the lowest level this year, from 79.3 last month. (Bloomberg)
US: Payrolls climb in 27 states, led by California and Ohio
Payrolls increased in 27 states in May, while the unemployment rate climbed in 18, indicating progress in the US labor market remains uneven. California led the nation with a 33,900 gain in payrolls, followed by Ohio with 19,600 more jobs. The economy last month added the fewest number of workers in a year, while the jobless rate rose to 8.2%. (Bloomberg)
US stock futures rise as vote signals Greece will remain in euro zone
US stock futures rose, following a two-week gain in equities, as concern over Greece exiting the euro eased after official projections showed that the largest pro-bailout parties won enough seats to form a coalition. Standard & Poor’s 500 Index futures expiring in September added 1.0% to 1,342.84. The benchmark measure for US equities advanced 1.3% last week. Dow Jones Industrial Average futures gained 115.26 pts, or 0.9%, to 12,767. The euro rose 0.7% to EUR1.2745. Equity futures also rose after German Chancellor Angela Merkel’s government signaled a willingness to loosen Greece’s austerity requirements as long as the next government stands by its obligations under a European Union-led bailout program. (Bloomberg)
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