China: Signals tolerance of slower growth after annual meeting
China said it will seek a higher “quality and efficiency” of growth next year, signaling new leaders may accept a reduced pace of expansion in exchange for a more sustainable model. There was no mention of seeking “relatively fast” growth, a policy in place since 2006, in a report by the state-run Xinhua News Agency after the annual central economic work conference in Beijing. Leaders vowed to target “sustained and healthy development” as they maintain a “prudent” monetary policy and “proactive” fiscal stance, Xinhua said. (Bloomberg)
Japan: Abe’s victory seen eroding demand for biggest debt
Shinzo Abe’s victory in the Japanese elections gives him a mandate to implement the fiscal and monetary stimulus plans that have already fueled a slump in 20-year government bonds and the yen. The yield premium investors demand to hold 20-year deb,t instead of 10-year securities, that climbed to 99 basis points on 5 Dec., the highest since 1999. That compares with a spread of 68 basis points for similar-maturity US Treasuries. The yen sank to a 20-month low today and has fallen more than 5% against the dollar since 15 Nov., when Abe called for “unlimited” monetary easing by the Bank of Japan to end deflation and an increase in public-works spending, fueling concern the world’s largest debt may expand.(Bloomberg)
EU and Singapore completes free trade pact negotiations
The European Union and Singapore concluded negotiations on a free-trade agreement after almost three years of talks, boosting the bloc’s efforts to increase commerce with Asian nations to revive economic growth. The EU will eliminate tariffs on all imports from Singapore over five years, while the island will allow duty-free access for all incoming shipments from the region immediately, the city’s Ministry of Trade and Industry said in a statement today. The deal will help companies from both signatories to bid for government contracts in the other’s market. (Bloomberg)
US: Spending probably rose, home sales climbed in Nov
Consumer spending probably rose in November as Americans set aside the threat of higher taxes next year while shopping for the holidays, economists said before reports this week. Household purchases increased 0.4% last month after declining 0.2% in October, according to the median estimate from 66 economists surveyed by Bloomberg before 21 Dec figures from the Commerce Department. Other reports may show home sales and demand for long-lasting goods climbed. “The economy is holding in,” said Jim O’Sullivan, chief US economist for High Frequency Economics Ltd. in Valhalla, New York. “For the household sector, the housing numbers have been quite good. The labor market numbers are OK.” (Bloomberg)
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