News Highlights - Week of 25 - 29 July 2016

To read the full report, data and graphs go to http://asianbondsonline.adb.org/newsletters/abowdh20160801.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 25 - 29 July 2016

The United States Federal Reserve last week held its key policy rate, the Federal Reserve Fund Rate, unchanged at between 0.25% and 0.50%. In its decision, the Federal Reserve noted that the current monetary policy stance remained accommodative. The Federal Reserve also noted that some economic indicators have improved, with strong job gains in June signaling a healthier labor market.

*     At its monetary policy meeting on 29 July, the Bank of Japan (BOJ) announced that it would maintain its qualitative and quantitative monetary easing measures at their current pace. In addition, the BOJ announced that it will increase its annual purchases of exchange-traded funds to about JPY6.0 trillion from about JPY3.3 trillion. The BOJ will also double its US dollar lending program to USD24 billion from USD12 billion to further support Japanese firms’ overseas activities.

*     Consumer prices in Japan fell 0.4% year-on-year (y-o-y) in June, the same pace of decline recorded a month earlier. Consumer prices in Singapore fell 0.7% y-o-y in June, compared to a decline of 1.6% y-o-y in May.

*     Real gross domestic product (GDP) growth in the Republic of Korea stood at 0.7% quarter-on-quarter (q-o-q) and 3.2% y-o-y in the second quarter of 2016, up from 0.5% q-o-q and 2.8% y-o-y in the first quarter, based on advance estimates of the Bank of Korea. The higher q-o-q GDP growth rate in the second quarter of 2016 stemmed from more rapid growth in  final consumption expenditure and gross fixed capital formation.

*     Industrial production in Japan increased 1.9% month-on-month (m-o-m) in June, following a decline of 2.6% m-o-m in May. Industrial production growth in the Republic of Korea decelerated to 0.8% y-o-y in June from 4.7% y-o-y in May amid slower growth in the manufacturing sector. Singapore’s manufacturing output contracted 0.3% y-o-y in June, down from 0.8% y-o-y growth in May.

*     Hong Kong, China’s exports fell 1.0% y-o-y in June to HKD296.5 billion, imports also declined 0.9% y-o-y to HKD342.1 billion, resulting in a trade deficit of HKD45.6 billion. Japan posted a JPY693.1 billion trade surplus in June, a reversal from the JPY42.9 billion trade deficit posted in May. The Philippines recorded a merchandise trade deficit of USD2.0 billion in May, as exports of goods were down 3.8% y-o-y and imports climbed 39.3% y-o-y.

*     Thailand’s current account surplus rose to USD3.0 billion in June from USD2.2 billion in May. Exports improved registering a growth of 1.9% y-o-y in June, compared with a 3.7% y-o-y decline in May. High tourism receipts and declining imports also contributed to the surplus.

*     Local currency corporate debt issuance in the Republic of Korea climbed to KRW10.8 trillion in June from KRW10.1 trillion in May, buoyed by monthly increases in the issuance of asset-backed securities and financial debentures.

*     LCY government bond yields fell last week for all tenors in Indonesia and the Republic of Korea; and for most tenors in Malaysia. Yields rose for most tenors in the Philippines, Singapore, Thailand, and Viet Nam. Yield movements were mixed in Hong Kong, China; and yields were mostly unchanged in the People’s Republic of China. Yield spreads between the 2-year and 10-year maturities narrowed for all markets except in Singapore, Thailand, and Viet Nam; and was unchanged in the People’s Republic of China.

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