At its monetary policy meeting on 29 January, the Bank of Japan (BOJ) announced that it would maintain its qualitative and quantitative monetary easing measures at their current pace. In addition, the BOJ introduced a negative interest rate to achieve its inflation target of 2.0%. The BOJ will adopt a three-tier system in which the outstanding current account balance of each financial institution with the bank will be applied a positive interest rate on the basic balance, a zero interest rate on the macro add-on balance, and a negative interest rate on the policy rate balance. With the implementation of these measures, the BOJ intends to lower the short-end of Japan’s yield curve and put additional downward pressure on the rest of the yield curve.
The Republic of Korea’s real gross domestic product (GDP) grew 3.0% year-on-year (y-o-y) in 4Q15 and 2.6% in full-year 2015, according to advance estimates from the Bank of Korea. In the Philippines, real GDP growth inched up to 6.3% y-o-y in 4Q15 from 6.1% y-o-y in 3Q15. For full-year 2015, real GDP expanded 5.8%, compared with 6.1% growth in 2014.
Consumer price inflation in Japan eased to 0.2% y-o-y in December from 0.3% y-o-y in November. In Singapore, consumer prices fell 0.6% y-o-y in December after declining 0.8% y-o-y in November, marking the 14th consecutive month that deflation was recorded.
Hong Kong, China’s exports and imports continued to fall in December, declining 1.1% y-o-y and 4.6% y-o-y, respectively. Japan posted a JPY140.3 billion trade surplus in December, a reversal from the JPY384.6 billion trade deficit posted in November. The Philippines’ merchandise trade deficit narrowed to US$977 million in November from US$1.9 billion in October. Thailand’s current account surplus rose to US$4.9 billion in December from US$3.0 billion in November, buoyed by a monthly increase in the merchandise trade surplus. In Viet Nam, exports rose 2.2% y-o-y to US$13.8 billion in January, while imports fell 0.8% y-o-y to US$14.0 billion.
Industrial production in Japan decreased 1.4% month-on-month (m-o-m) in December. In the Republic of Korea, industrial production grew 1.3% m-o-m in December. Manufacturing output in Singapore fell 7.9% y-o-y in December after declining 6.4% y-o-y in November. Manufacturing production growth in Thailand accelerated to 1.3% y-o-y in December from 0.3% y-o-y in November. Industrial production growth in Viet Nam eased to 5.9% y-o-y in January after rising 9.0% y-o-y in December.
Last week, Moody’s Investors Service affirmed Indonesia’s Baa3 sovereign credit rating. The rating was given a stable outlook.
Corporate debt issues in the Republic of Korea amounted to KRW123,102 billion in 2015, up from KRW116,172 billion in 2014.
Toyota Leasing (Thailand) raised THB8 billion from a dual-tranche bond sale last week. The transaction comprised a THB3.5 billion 3-year and 1-month debenture carrying a 1.93% coupon and a THB4.5 billion 4-year and 1-month debenture with a 2.14% coupon.
Government bond yields fell last week for all tenors in Indonesia and the Republic of Korea; and for most tenors in Hong Kong, China; Malaysia; the Philippines; Singapore; and Thailand. Yields rose for most tenors in the PRC and Viet Nam. Yield spreads between the 2-year and 10-year tenors narrowed for all markets except in the Philippines and Thailand; while the spread in the PRC was unchanged.