"Today’s grab bag of news from around the world mostly points to an easing in some of the risks confronting major economies in Europe and Asia. Fears of deflation in Europe were mollified somewhat, Chinese monetary conditions don’t seem as bad as markets had been signaling, Japanese firms are boosting their orders for machinery and India is gradually getting its problematic external balances under control".
"At the margins, developments such as these give greater confidence to policymakers–including at the Federal Reserve–that “headwinds” from problem spots in the global economy are softening. On balance, that works toward an eventual moderation in the extraordinary amount of monetary stimulus currently coming from major central banks. Specifically, it helps the case for the Fed to start tapering its bond-buying as early as next week’s meeting of its Open Market Committee". (MC)
"Chinese financial institutions issued 624.6 billion yuan ($103 billion) worth of new yuan loans in November, up from CNY506.1 billion in October and well above economists’ expectations of 550 billion yuan, data from the People’s Bank of China showed Wednesday. Total social financing, a broader measurement of credit in the economy, came to CNY1.23 trillion in November, up from CNY856.4 billion in October.
The surprising growth in loans and total social financing indicates that the monetary tightening implied by the sharply higher bond yields and interbank rates of recent weeks isn’t happening to the extent the market fears it. The news suggests the central bank is continuing to inject money into the system to counter hot-money inflows of the sort that recently have driven the yuan to record levels against the U.S. dollar. (MA)
INDIA: The trade deficit narrowed in November on a sharp fall in imports and a slight expansion in exports. November exports rose 5.86% on-year compared to 13.5% in October while imports contracted 16.4%, reducing the trade deficit to $9.2 billion in November from October’s $10.6 billion.
The sharp fall in imports is a direct result of efforts by the government and central bank to bring the country’s perilous current-account deficit–which scared away investors during the summer selloff from emerging-market assets–under control. The government last week took the unusual step of announcing the July-September current-account data earlier than expected, primarily to trumpet that the deficit had shrunk to a four-year low. The November trade data suggest that trend is likely to continue in the final quarter of calendar 2013''. (MA)
Source : WSJ
