Tag Archives: Industrial Output

UPDATE 2-Italian bonds are set for the best week in two months | Instant News


* Italian 10-year bond yields fell 16 bps this week

* Set for the biggest weekly decline in 2 months

* German Bund results briefly touched 2-month lows of -0.499%

* Eurozone periphery government bond yields tmsnrt.rs/2ii2Bqr (Add comments, update prices to close)

By Dhara Ranasinghe

LONDON, July 24 (Reuters) – The Italian bond market is ready for the best week in two months on Friday, even as borrowing costs rise from 4-1 / 2 month lows set after this week’s agreement on a European Union recovery fund to support the economy hit by coronavirus.

Bond yields across the euro zone rose after data showing eurozone business activity recovered in July and signs of rising US / Chinese tensions prompted investors to take profits on rising prices this week and yields fell.

Yields on Italian 10-year bonds rose 2 basis points to 1.07%, from Thursday’s low of around 1.04%.

However, Italian yields fell around 16 bps this week, set for the biggest weekly decline in two months. According to Tradeweb data, Italian 10-year bond yields fell below 1% on Thursday for the first time since March.

Yields on Spanish and Portuguese 10-year bonds are down about 6 bps this week, Greek yields have fallen 10 bps.

“The impact of the recovery fund is not fully appreciated and is still not fully appreciated,” said Peter Chatwell, head of multi-asset strategy at Mizuho. “The structural part of this story is that it allows the risk of the euro to split to a level that has not been seen for some time.”

In Germany, yields rose from two-month lows after the euro zone flash Composite Purchasing Managers Index (PMI), seen as a good indicator of economic health, rose to 54.8, the highest since mid-2018 and above forecasts. The final reading for June is 48.5.

The 10-year Bund yield held up to 4 bps at -0.44%, after briefly touching a two-month low in early trade around -0.50% because German bonds also benefited from renewed optimism about the euro area.

Three forces seem to play a role – a strong fiscal response, an aggressive stimulus from the European Central Bank, and a perception of better handling the health crisis versus the United States.

It also helped raise the euro to 21-month highs against the dollar this week.

European Union leaders on Tuesday approved a 750 billion euro recovery fund, which according to Italian Prime Minister Giuseppe Conte would allow his government to change Italy. Italy and Spain, the two countries hardest hit by the pandemic, are among the biggest beneficiaries of the agreement.

“We think the Recovery Fund is a key element for Europe’s response to the shock. The ECB is helping to cope with large funding needs but cannot replace every foreign investor in the periphery, “analysts at BofA said in a note.

Reporting by Dhara Ranasinghe; edit by Larry King and Steve Orlofsky

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UPDATE 1-Brazil car sales to dive 40% by 2020, the trade group said | Instant News


(New throughout, added estimates)

SAO PAULO, June 5 (Reuters) – Brazilian car manufacturers association on Friday estimates car sales in 2020 will drop 40% from last year to 1.675 million units, the first official estimate of the impact of the new corona virus on South America’s top car manufacturer.

This estimate is broadly in line with the results so far. Car sales fell 38% in the first five months of this year. The Brazilian car industry hopes 2020 will be a tent year with solid growth. But the coronavirus crisis quelled those hopes, along with much of the global economy.

Car production fell 49% through May, although Anfavea, as the auto makers’ association is known, did not release a full year of output forecasts.

For May alone, production fell 84% from last year to 43,100 units. Sales reached 62,200 units, 75% lower than last year.

Exports fell 91% compared to 2019. (Reporting by Alberto Alerigi Jr. and Marcelo Rochabrun; Editing by David Gregorio)

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Contracts for Italian factory activity less than expected in May: PMI | Instant News


PHOTO FILE – A worker at the Liebherr manufacturing company, which manufactures tool cutting tools, wears gloves when he works in a factory the day after reopening, when Italy begins to gradually end national locking due to the spread of coronavirus disease (COVID-19), in Collegno, Italy, 5 May 2020. REUTERS / Massimo Pinca

ROME (Reuters) – Italian manufacturing activity shrank in May for the 20th month running but much sharper than the previous month, a survey showed on Monday, when Italy emerged from locking in to try to contain one of the world’s worst corona virus outbreaks.

The IHS Markit Purchasing Managers Index (PMI) rebounded to 45.4 from 31.1 in April, remaining well below the 50 mark that separates growth from contraction.

The data is much weaker than expected. The median estimate in a Reuters survey of nine analysts has pointed to 37.0.

April’s reading was the lowest since IHS Markit launched a survey in 1997, which reflected the closure of all factories that were not considered important to the country’s supply chain. Plants are allowed to reopen in May.

The Markit IHS sub-index for output at the factory jumped to 47.5 in May from a record low of 11.4 in April, indicating another decline in production but a much lower decline.

The eurozone’s third-largest economy shrank by 5.3% in the first quarter from the previous three months, the ISTAT statistics bureau reported on Friday, the sharpest decline in gross domestic product since the ISTAT series currently began in 1995.

The anti-establishment government of the 5-Star Movement and the center-left Democrats estimate a full year GDP decline of 8%.

Reporting by Gavin Jones; Editing by Catherine Evans

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German manufacturing production contract back in May – PMI | Instant News


FILE PHOTOS: Employees of the German car manufacturer Porsche working on the Porsche 911 at the Porsche plant in Stuttgart-Zuffenhausen, Germany, February 19, 2019. REUTERS / Ralph Orlowski

BERLIN (Reuters) – The German manufacturing sector continued to contract in May as factories faced weak demand because of a layoffed employee pandemic, according to a survey published on Monday that showed pessimistic business about the future.

IHS Markit’s final Managers Purchasing Index (PMI) for manufacturing, which accounts for around one fifth of Europe’s largest economy, rose to 36.6 from 34.5 in April. The flash reading is 36.8.

“Although more factories have begun to resume operations after loosening of restrictions, weak fundamental demand is still a limiting factor, as evidenced by the survey size of new orders that rebounded far less than output in May,” said Phil Smith, principal economist at IHS Markit.

“Manufacturing production has dropped 7-8% from its peak at the end of 2017 even before the onset of the pandemic, and now that number is seen in the region of 25-30%.”

Output declined more slowly than in April, but with companies operating far below full capacity and pessimistic about future output, factory staff reductions accelerated to their fastest pace in 11 years, with the investment goods sector being hit hard.

Reporting by Joseph Nasr; Editing by Catherine Evans

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British GDP shrank by a record 5.8% in March, COVID more difficult to reach the target | Instant News


LONDON (Reuters) – The UK economy shrank by a record 5.8% in March when the coronavirus crisis escalated and the government closed most of the country, according to official data leading to an even bigger hit to come.

The monthly decline in gross domestic product is felt in almost all sectors – from restaurants and bars that are closed in the country to building sites and factories – and is the largest since comparable records began in 1997.

“The sharp contraction in UK Q1 GDP came as a small surprise, but it clearly highlights the magnitude of the challenges facing policy makers,” said JP Morgan market strategist Hugh Gimber.

In the first three months of this year, GDP contracted 2.0% from the last three months of 2019, the biggest decline since the depth of the financial crisis at the end of 2008, the Office for National Statistics said.

The Bank of England said last week that economic contraction in the April-June period could approach 25% and lead to the biggest annual decline in more than three centuries.

UK two-year government bond yields GB2YT = RR slipped to a record low of -0.045% after the data, reinforcing expectations that the Bank of England will increase its record asset purchase by 645 billion pounds ($ 791 billion) in asset purchases next month.

Finance Minister Rishi Sunak said Britain was now in the midst of a significant recession.

“We have to support people’s jobs, their income, current livelihoods, and support businesses so we can get through this period of severe disruption and emerge stronger on the other side,” he said after GDP data.

A newspaper said on Tuesday that finance ministry officials had warned Sunak that the budget deficit could swell to a record 337 billion pounds this year from an estimate of only 55 billion pounds in March.

On Tuesday, the British government extended an expensive job support program for another four months, although businesses need to take more tabs from August.

LOCKDOWN Delayed

The decline in first-quarter GDP was slightly smaller than economists forecast in a Reuters poll, and less than the 3.8% decline suffered by the eurozone in the first quarter. But Britain only started locking it on March 23, slower than many other eurozone countries.

COVID-19 has killed more than 40,000 people in Britain, the highest death rate reported in Europe so far.

Economists say output appears to have dropped by around one fifth after the lockdown took effect.

Separate data from the British Retail Consortium’s trade agency showed retail spending fell by almost a fifth in April. Barclaycard said consumer spending fell by more than a third.

Wednesday’s ONS figures showed household consumption fell 1.8% in the first quarter, the most since 2008.

The BoE said last week the economy could recover if the coronavirus restrictions were lifted, with a record 15% recovery after the historic 14% decline in GDP for 2020 as a whole.

PHOTO FILE: General view of the Canary Wharf financial district, after the outbreak of coronavirus (COVID-19), in London, England, 5 May 2020. REUTERS / Marika Kochiashvili

But it warns that recovery may be slower, especially if consumers prove to be cautious about returning to their normal lives, a view shared by many economists.

“The engine of the British economy will be far more difficult to start than stop,” said Rabobank economist Stefan Koopman.

“Talk of a V-shaped recovery feels like a dream, and we expect a period of prolonged growth in most economies. A flatter U-shaped recovery is more likely, “he said.

Additional reporting by Alistair Smout, edited by Larry King

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