Thailand

• Central bank throws red flag on loans — The BoT ramped up its warning that escalating household debt in recent years is posing a risk to the country’s financial stability and warrants close monitoring. BoT data shows household debt accelerated to 78% of GDP last year from 63% at the end of 2010. The rapid pace is a cause for concern considering the fi8gure stood at 44% at the end of 1Q03. Household debt totaled Bt8.82trn in 2012 or Bt439.000/houseold based on 20.1mn households at the end of the year. (Bangkok Post, 15/06/13)
• Thai capital market braces for exodus of offshore investors — The Thai capital market is bracing for an exodus of foreign investors as the US Federal Reserve will soon tighten its unprecedented monetary easing stance, said BoT governor Prasan. “Only part of the funds has been pulled out of the bond market. The country’s foreign reserves, however, can cushion risks even if all funds are moved out as foreigners’ holdings in Thai bonds is far smaller than foreign reserves at around US$200bn,” he said. (Bangkok Post, 18/06/13)
• IMF cautious about growth —Thailand’s economic growth is projected at 4% this year and 5% in 2014, albeit with risks to the downside due to external factors, according to the International Monetary fund. The IMF also noted that volatility in capital flows and political unrest were other potential risks to the country’s growth outlook. (Bangkok Post, 18/06/13)
• Cabinet endorses Bt314bn loan — The cabinet yesterday approved a plan to borrow Bt314bn to implement the government’s water management and flood prevention scheme. The government also approved Bt284bn for the construction of nine project modules. It managed to save Bt6.2bn from an earlier approved budget of Bt291bn. (Bangkok Post, 19/06/13)
• BoT signals a pause after cut — The BoT says it will maintain balance on growth and financial stability risks, implying that it could stand pat at the upcoming policy rate call on July 10 after a 25 basis point cut for the first time this year at the May 29 meeting. Risks to financial stability incurred from the double-digit percentage growth in credit and rising household debt along with downside growth are chief concerns for the central bank, governor Prasan said after giving a speech at the Foreign Correspondents’ club of Thailand. (Bangkok Post, 19/06/13)

 Global

• US: The seasonally adjusted Producer Price Index (PPI) for finished goods rose 0.5% in May, after falling in the previous two months, the U.S. Labor Department reported Friday. The latest PPI figure came in higher than analysts’ estimates. Meanwhile, the initial reading of the U.S. current-account deficit increased to US$106.1bn in the first quarter of the year from the sharply revised-down figure of US$102.3bn in the fourth quarter of last year, the Commerce Department said Friday. A joint survey by Thomson Reuters and the University of Michigan, however, showed the U.S. consumer confidence fell to 82. 7 in June after hitting a nearly six-year high in May, causing major stock indices to accelerate falling. Other data showed the U.S. industrial production in May remained unchanged from the prior month. (Xinhua, 15/06/13)
• US: June Empire State Manufacturing Survey indicated that conditions for New York manufacturers improved modestly, according to the Federal Reserve Bank of New York. The general business conditions index rose to 7.8, beating market consensus. The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) surged eight points to a reading of 52. It was the first time that the index rallied above 50 since April 2006. Any reading over 50 indicates that more builders view sales conditions as good than poor. (Xinhua, 18/06/13)
• US: The Fed kept its federal funds rate unchanged, according to a statement released Wednesday afternoon after the meeting of the Federal Open Market Committee (FOMC), the Fed policy setting arm. Meanwhile, the committee decided to continue purchasing additional agency mortgage-backed securities at a pace of US$40bn per month and longer-term Treasury securities at a pace of US$45bn per month. However, Bernanke struck a hawkish chord in his news conference following the policy announcement, saying that bond buying could be reduced later this year, depending on conditions. (Xinhua, 20/06/13)
• US: U.S. consumer prices rebounded mildly in May, rising 0.1% on a seasonally adjusted basis after a 0.4% decline in April, the U.S. Labor Department reported Tuesday. The fresh data were lower than market estimates and suggested that inflationary pressure remained subdued, which could provide more cushion for the Fed to keep its massive asset purchases to stimulate the economy.
• Meanwhile, the U.S. privately-owned housing starts in May jumped 6.8% to a seasonally adjusted annual rate of 914,000, falling short of market consensus, according to the U.S. Commerce Department. Building permits, a sign of future demand, fell 3.1% in May to a seasonally adjusted annual rate of 974,000, the department added. (Xinhua, 19/06/13)
• Germany: German investor sentiment improved. ZEW Institute in Mannheim said its index of investor and analyst expectations, increased to 38.5 in June from 36.4 in May, which aims to predict German economic developments six months in advance. (Xinhua, 19/06/13)
• China: FDI into China rises in first five months — Foreign direct investment into china rose during the first five months of this year, the government announced yesterday, [paced by strong increases from the EU and US. Incoming FDI, which includes financial sectors, rose 1.0% to US$47.6bn from January through May, the Commerce Ministry announced. It was also up 0.3% in May to US$9.26bn from the same month last year, the ministry said. (Bangkok Post, 19/06/13)
• Japan: Japan’s exports surge more than 10% in May — Japan’s exports surged in May, as the yen traded at its weakest levels of the year, with the result leading to a smaller-than-expected trade deficit. Japanese exports rose 10.1% from a year earlier, the Finance Ministry reported Wednesday, with the results beating a 6.5% rise forecast in a Reuters survey, and a 5% increase tipped in a separate Dow Jones Newswires survey. The surge got help from an 8.3% rebound in exports to China, with U.S.-bound shipments up 16.3%, though those to the European Union fell 4.9%. (Market Watch, 18/06/13)