Sub-Saharan African Eurobonds are experiencing the worst start to a year on record, accounting for half of the 20 worst performing dollar bonds issued by developing countries in 2016.
According to the Bloomberg USD Emerging Market Sovereign Bond Index. African securities have dropped 5.4 percent this year, compared to the average 1.3 percent loss in emerging markets, the worst first two weeks of a year since data compiling began in 2010. Average yields on African bonds have jumped to 9.4 percent this year as yields on dollar debt from Zambia and Ghana have surged above 15 percent.
Global equities on Tuesday bounced back from a rout at the start of the year, as investors were relieved that China’s growth rate was in broadly in line with consensus expectations, easing fears of a hard landing. The MSCI Asia-Pacific index outside Japan advanced 1.6 percent with China’s Shanghai Composite Index rallying 3.2 percent.
The main three European indices, including the FTSE 100, the DAX, and the CAC 40, all rose more than 1 percent in morning session. U.S. equities opened higher as well, but they pared gains as a renewed slid in U.S. oil prices damped investors’ risk appetite.
The U.S. National Association of Home Builder’s confidence index remained in positive territory at 60 in January, unchanged from the reading in December. Steady job market gains are supporting the housing market, despite the beginning of the Federal Reserve’s monetary policy tightening cycle.
Inflation in the Euro Area was 0.2 percent (y/y) in December of 2015, unchanged from the previous month. The largest price increases were in restaurants and cafes, tobacco and vegetables, which partly offset by lower energy costs. Core inflation was 0.9 percent in December, also unchanged from November.
Industrial production in Japan contracted by 0.9 percent (m/m) in November of 2015, led by a 2.4 percent fall in shipments. Year-on-year, output gained 1.7 percent, rebounding from a 1.4 percent fall the previous month.
Emerging and Developing Economies
Chinese GDP grew by 6.9 percent in 2015, slowing from 7.3 percent in 2014, and broadly in line with expectations. The pick-up in growth of services and consumption was offset by a slowing of manufacturing and exports.
Europe and Central Asia
The central bank of Azerbaijan announced a 20 percent tax on taking money out of the country. The imposition of capital controls is in response to the economic difficulties caused by the fall in oil prices. Since the peg to the U.S. dollar was abandoned in December, the manat has lost about one third of its value against the dollar.
Latin America and the Caribbean
Venezuela’s GDP declined by 7.1 percent in the first nine months of 2015 compared with the same period in 2014, according to the first statistics published by the central bank in a year. Inflation jumped to 141.5 percent at the end of September 2015, compared with 68.5 percent at the end of 2014.
India’s trade deficit widened to $11.6 billion in December, from a deficit of $9.8 billion in November. Exports fell 15 percent (y/y) while imports dropped by only 4 percent, with a jump in gold imports dampening an overall reduction of imports.
Source: The Global Daily