Last week, the Federal Reserve Open Market Committee raised the target range of its key policy rate, the federal funds rate, by 25 basis points from 0.25% and 0.50% to between 0.50% and 0.75%. The Federal Reserve said that the increase was supported by steady economic grow

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News Highlights - Week of 12 - 16 December 2016

Last week, the Federal Reserve Open Market Committee raised the target range of its key policy rate, the federal funds rate, by 25 basis points from 0.25% and 0.50% to between 0.50% and 0.75%. The Federal Reserve said that the increase was supported by steady economic growth in the latter half of the year and an improving labor market. The Federal Reserve expects that inflation will reach its 2.0% target over the medium term.

*     Hong Kong, China raised by 50 bps its base rate to 1.0%, following the United States Federal Reserve's hike of the target range of the Federal Funds rate. Bank Indonesia’s Board of Governors decided to keep its 7-day reverse repurchase rate unchanged at 4.75% during its meeting on 14–15 December. The deposit facility rate (4.00%) and lending facility rate (5.50%) were also held steady. The Bank of Korea’s Monetary Policy Board decided to keep the base rate unchanged at 1.25% during its meeting on 15 December. The decision was made on the back of the board’s forecast of moderate domestic and global economic growth, with downside risks to future growth coming from uncertainties over domestic and external conditions.

*     The People’s Republic of China’s industrial sector grew 6.2% year-on-year (y-o-y) in November after growing 6.1% y-o-y in October. Japan’s final industrial production growth for October was adjusted to –1.4% y-o-y from a preliminary estimate of –1.3% y-o-y. On a month-on-month and seasonally adjusted basis, final October industrial production growth registered no change from a preliminary estimate of 0.1%.

*     Indonesia’s exports and imports in November rose 21.3% y-o-y to USD13.5 billion and 9.9% y-o-y to USD12.7 billion, respectively, resulting in a trade surplus of USD838 million. Singapore’s non-oil domestic exports (NODX) rose 11.5% y-o-y in November after contracting 12.0% y-o-y in October. In November, electronic NODX grew 3.5% y-o-y and non-electronic NODX expanded 15.3% y-o-y.

*     Personal remittances from overseas Filipinos amounted to USD2.3 billion in October, bringing cumulative personal remittances for January–October to USD24.4 billion. Cash remittances coursed through banks amounted to USD2.1 billion in October, reaching a total of USD22.1 billion in the first 10 months of the year.

*     The employment rate in the Philippines improved to 95.3% in October from 94.4% a year earlier. Accordingly, the October unemployment rate hits its lowest level in 11 years at 4.7%. The underemployment rate worsened to 18.0% in October from 17.6% a year earlier.

*     Singapore’s retail sales amounted to SGD3.7 billion in October, reflecting a 2.2% y-o-y increase for the second month in a row.

*     Local currency government bond yields rose for all tenors in Hong Kong, China, Indonesia, Malaysia, Singapore, and Viet Nam, and for most tenors in the People’s Republic of China, and Thailand. On the other hand, yields for all tenors in the Republic of Korea fell while yield movements in the Philippines were mixed. Yield spreads between the 2-year and 10-year tenors widened in all markets except for Indonesia, the Philippines, Singapore, Thailand, and Viet Nam.

*     The 19 December issue of Weekly Debt Highlights is the last for 2016. Issuance will resume on 9 January 2017.

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