The euro slipped through the low of the year and the weekly trend line going back to 2012. However, it found bids near $1.3460 and has recovered a bit. The key on the upside now is $1.3500. A move above there and the technical tone can begin stabilizing.
The lower than expected core US CPI reading has helped. The yen has also ticked higher as Treasury yields ease.
Indonesia’s next president will need significant funds to fulfil election promises. But both candidates Joko Widodo (Jokowi) and Prabowo Subianto have expressed caution about international borrowings.
So should Indonesia undertake the risks of borrowing from overseas? There is little consensus among Indonesian policymakers. The issue is a difficult and sensitive one, but what is the right course of action?
The US dollar is little changed to start the week. The apparent calm masks heightened geopolitical tensions in Ukraine and Gaza. Equity markets are trading heavy and this is helping to give the core bond markets, including US Treasuries, a better bid tone.
Investors are digesting the weekend developments and awaiting this week’s key data. US and Japanese CPI figures, euro zone flash PMI, and UK retail sales and first estimate of Q2 GDP are the main highlights.
Geopolitical events are overshadowing a light economic calendar ahead of the weekend. The shooting down of the Malaysian plane over Ukraine and the Israel’s launch of a ground assault in Gaza dominate the focus. After a strong response that saw US 10-year yields fall to 2.44% and the dollar fall to nearly JPY101.00, the markets are consolidating, though equities have weakened further today, though the S&P 500 has stabilized.
Since the mid-2000s, the South Asian region has witnessed an incoming wave of Chinese financial assistance. In some South Asian countries like Sri Lanka, China has overtaken traditional donors by highly engaging in post-war infrastructure development activities. So China’s engagement in South Asia creates both opportunity and uncertainty for India and its neighbours. The question remains: will intra-regional trade increase, if so, at what cost to the region?
The US dollar is trading higher against the major currencies. Many observers are attributing dollar’s gains yesterday and today to comments from Yellen. We are concerned that this is not a fair interpretation of Yellen, or necessarily of the market.
The launch of negotiations on the Trans-Pacific Partnership (TPP) (in APEC’s backyard led by the United States) and (later) the Regional Comprehensive Economic Partnership (RCEP) (under the umbrella of ASEAN) is dominating thinking about regional integration. These agreements are designed in part to leverage value out of the plethora of bilateral free trade agreements (FTAs) negotiated over the past 15 years. Yet trans-regional FTAs, like the proposed TPP, are only a small step, incidental to realising the potential of Asian economic integration.
Cybercriminals – i.e. hackers, industrial or corporate spies etc. etc. – are causing nearly $445 billion in economic damage every year, according to a report from the Center for Strategic and International Studies (CSIS), with the damage for businesses nearly double that for individuals.
“Cybercrime remains a growth industry,” said the Washington-based think-think. “The returns are great, and the risks are low.”
Recently, China’s yuan has depreciated, and there is some evidence that Chinese officials got the ball rolling and may be continuing to guide the currency lower. This has been the cause of great consternation for G7 policy makers. Yet while the U.S. and Europe often issue statements against Chinese currency intervention, little is done when European officials purposely talk the euro lower.
This year is shaping up to be another challenging year for bond markets in Asia after a see-saw 2013 which saw prices rise at the start of the year, and then fall back on news that the US Federal Reserve plans to reduce or “taper”its quantitative easing operations.
There are several key developments/trends which could have strong implications for the region’s bond markets this year. Here’s what to look out for:
