News Highlights - Week of 13 - 17 June 2016

To read the full report, data and graphs go to http://www.asianbondsonline.adb.org/newsletters/abowdh20160620.pdf?src=newsletter&id=uWidK3KdmgXVUWes9IgIcqKp1miwxx

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News Highlights - Week of 13 - 17 June 2016

During its monetary policy meeting on 15 June, the United States (US) Federal Reserve opted to keep the target range for the federal funds rate at 0.25%–0.50%. The Federal Open Market Committee said that while growth activities appear to have picked up and the unemployment rate has declined, job gains have slowed. In addition, the committee noted that business fixed investment still remains weak and that while inflation is currently below the 2.0% target, it is expected to meet the target over the medium-term.

*     In a meeting held on 15–16 June, Bank Indonesia’s Board of Governors decided to reduce its benchmark interest rate by 25 basis points (bps) to 6.5% in order to boost economic growth. The central bank also lowered by 25 bps the deposit facility rate to 4.5%, the lending facility rate to 7.0%, and the 7-day (reverse) repo rate to 5.25%. The central bank will also take steps to ease macro-prudential policy effective August 2016. At its monetary policy meeting on 16 June, the Bank of Japan announced that it would maintain its qualitative and quantitative monetary easing measures, along with the negative policy rate it introduced in January.

*     Consumer price inflation in Malaysia eased to 2.0% year-on-year (y-o-y) in May from 2.1% y-o-y in April as seven out of twelve major commodity groups posted lower annual increases in May and three groups posted higher annual decreases.

*     The People’s Republic of China’s industrial production growth was unchanged in May at 6.0% y-o-y. The mining sector dragged down the industrial production growth rate, with output declining 2.3% y-o-y. 

*     In Indonesia, a trade surplus amounting to USD376 million was recorded in May. In Singapore, non-oil domestic exports rose 11.6% y-o-y in May.

*     In the Philippines, personal remittances from overseas Filipinos rose 3.8% y-o-y to USD2.4 billion in April, according to the Bangko Sentral ng Pilipinas.

*     Last week, Bank Negara Malaysia and the Financial Markets Association of Malaysia announced the adoption of a new methodology for the computation of the Malaysian ringgit’s exchange rate against the US dollar. The new rate shall be effective 18 July and will be known as the Kuala Lumpur USD–MYR Reference Rate.

*     Foreign net bond investment in the Republic of Korea rose to KRW888 billion in May from KRW631 billion in April, according to a report by the Financial Supervisory Service released last week.

*     Last week, the Government of Indonesia sold JPY100 billion worth of samurai bonds via private placement to institutional investors in Japan. The offering comprised JPY62 billion of 3-year bonds with a coupon rate of 0.83% and JPY38 billion of 5-year bonds with a coupon rate of 1.16%.

*     Yields mostly fell in Indonesia, The Republic of Korea Malaysia, the Philippines, Singapore and Thailand and Viet Nam, despite the US Federal Reserve keeping its policy rate unchanged.  The 2-year versus 10-year yield spreads fell for most markets except Indonesia, the Philippines, Thailand and Viet Nam.

*     Watch out for the release of the June issue of the Asia Bond  Monitor,  which  will  be  launched  at a conference in partnership with Korea Capital Market Institute on  24 June 2016 in  Seoul, Republic of Korea. A copy of the program can be found on this link http://asianbondsonline.adb.org/documents/launch_agenda_asia_bond_monitor_june_2016.pdf?src=wdh).

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