Monday, April 13, 2015

AsianBondsOnline Newsletter (13 April 2015)



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News Highlights - Week of 6 - 10 April 2015

In the Philippines, consumer price inflation eased to 2.4% year-on-year (y-o-y) in March from 2.5% y-o-y in February. The lower inflation rate was mainly due to a slower annual price increase in the food and non-alcoholic beverages index of 4.3% y-o-y compared with 4.8% y-o-y in February. The People’s Republic of China’s (PRC) consumer price inflation rose 1.4% y-o-y in March, the same pace as in February. On a month-on-month (m-o-m) basis, consumer prices fell 0.5% due to seasonal effects from the Lunar New Year. Meanwhile, the decline in producer prices slowed to –4.6% y-o-y in March from –4.8% y-o-y in February.    

*     At its monetary policy meeting on 8 April, the Bank of Japan (BOJ) announced that it would maintain its monetary easing measures. Inflation, excluding the effects of the consumption tax hike, is expected to remain unchanged in the short-term on a y-o-y basis due to the decline in energy prices, though it is expected to rise in the long-term. The Bank of Korea’s Monetary Policy Committee decided on 9 April to maintain the base rate at 1.75%. The committee forecasts that inflation will continue to remain at a low level amid falling oil prices and that the domestic economy will post a modest recovery going forward.

*     Japan’s current account surplus expanded to JPY1.4 trillion in February from JPY61.4 billion in January. This was mainly due to the lower goods and services deficit posted in February of JPY251.8 billion compared with JPY1.3 trillion in January. Moreover, the primary income account surplus also increased to JPY1.9 trillion in February from JPY1.4 trillion in January. In the Philippines, merchandise exports contracted 3.1% y-o-y to US$4.5 billion in February due to declines in export earnings among six major commodity product categories.

*     Industrial production growth in Malaysia decelerated to 5.2% y-o-y in February from 7.0% y-o-y in January due to moderating manufacturing growth. The increase in the manufacturing index eased to 4.0% y-o-y in February from 6.6% y-o-y in January, and the electricity index growth also declined to 1.9% y-o-y from 6.3% y-o-y in the previous month.

*     Last week, Japan’s Diet enacted a JPY96.3 trillion budget for fiscal year 2015. The Bank of Korea last week reported that it has revised downward its 2015 gross domestic product (GDP) growth forecast for the Republic of Korea to 3.1% from an earlier estimate of 3.4% made in January. The central bank also revised downward its 2015 consumer price inflation forecast to 0.9% from 1.9%.

*     Government bond yields rose last week for all tenors in Viet Nam; and for most tenors in the PRC. Yields fell for all tenors in Indonesia and Singapore; and for most tenors in the Republic of Korea. Yield movements were mixed in Hong Kong, China; Malaysia; Philippines; and Thailand. Yield spreads between 2- and 10-year tenors narrowed in Indonesia and the Philippines; while spreads widened in the PRC; Hong Kong, China; Malaysia; Singapore; Thailand; and Viet Nam. Yield spread in the Republic of Korea remained unchanged.

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