Real gross domestic product (GDP) growth in Japan increased to 0.6% quarter-on-quarter (q-o-q) in 1Q15 from 0.3% q-o-q in 4Q14. The growth was mainly due to a 1.1% q-o-q increase in private demand, led by a 1.8% q-o-q rise in private residential investment. On an annualized basis, Japan’s real GDP grew 2.4% in 1Q15, up from 1.1% in 4Q14. Real GDP growth in Thailand accelerated in 1Q15 on a year-on-year (y-o-y) basis—rising to 3.0% y-o-y from 2.1% y-o-y in 4Q14—but decelerated on a q-o-q basis—falling to 0.3% q-o-q from 1.1% q-o-q in 4Q14. Thailand’s faster y-o-y GDP growth stemmed from accelerated household spending and domestic investment on the demand side, and non-agricultural production growth on the supply side.
Hong Kong, China’s consumer prices rose 2.8% y-o-y in April, down from 4.5% y-o-y in March. The largest increase in consumer prices came from utility expenses, which rose 21.6% y-o-y. The Republic of Korea’s Producer Price Index (PPI) fell 3.6% y-o-y in April, the ninth consecutive month of decline, amid decreases in producer prices in the manufacturing and utility sectors. Consumer price inflation in Malaysia accelerated to 1.8% y-o-y in April from 0.9% y-o-y in March, mainly due to higher annual increases in the alcoholic beverages and tobacco group (up to 13.0% y-o-y in April from 10.6% y-o-y in March).
Bank Indonesia decided to keep its benchmark rate steady at 7.50%. It also held steady the deposit facility rate at 5.50% and the lending facility rate at 8.00%. The Bank of Japan announced that it would maintain its monetary easing measures while stating that the domestic economy is recovering moderately and the trend was expected to continue.
Singapore’s non-oil domestic exports (NODX) growth slowed to 2.2% y-o-y in April from 18.5% y-o-y in March. The lower growth rate was brought about by a decline in the exports of electronics products and slowing growth in non-electronics exports. Electronic NODX fell 3.8% y-o-y, compared with a 10.4% y-o-y increase in the previous month. Non-electronic NODX rose 4.7% y-o-y in April, down from 21.6% y-o-y in March.
Last week, Standard and Poor’s (S&P) affirmed Indonesia’s BB+ sovereign credit rating and revised the outlook to positive, indicating a possible rating upgrade in the next 12 months. In its announcement, S&P cited “improvements in Indonesia’s policy framework which have enhanced monetary and financial sector management.”
Last week, the People’s Republic of China (PRC) successfully auctioned CNY12.0 billion worth of dimsum bonds in Hong Kong, China through a (i) CNY5.0 billion 3-year tranche (coupon of 2.8%), (ii) CNY3.0 billion 5-year tranche (coupon of 3.0%), (iii) CNY1.5 billion 7-year tranche (coupon of 3.36%), (iv) CNY1.5 billion 10-year tranche (couponof 3.39%), (v) CNY0.5 billion 15-year tranche (coupon of 3.60%), and (vi) CNY0.5 billion 30-year tranche (coupon of 4.1%). Also last week, the Indonesian government priced a US$2.0 billion sukuk (Islamic bond) at a yield of 5.125%.
Yields rose for all tenors in Indonesia, as the central bank opted to hold rates steady in order to reduce the current account deficit, and for most tenors in the PRC and Japan, following a rise in inflation expectations. Yields fell mosly in Malaysia, the Philippines and Thailand, following slower q-o-q GDP growth. while movements were mixed in Hong Kong, China and the Republic of Korea. The 2-year versus 10-spread narrowed in Hong Kong, China, the Republic of Korea and Thailand.