Transcript Slide 1

Interest Rate Monitor
March 17, 2013
Brief Overview
International
US: Treasury yields drop after soft reading on
consumer sentiment despite healthy growth in US
retail sales
Eurozone: Slightly more open to expansionary fiscal
policy; Unprecedented Cypriot bank deposit tax
approved
UK: UK recession seems more likely as output drops
MENA Region
Egypt rules out IMF emergency finance
GCC News Highlights
GCC interbank rates
Comparative MENA Markets
Japan: Kuroda approved as new BoJ governor
Local Economy
Markets overview
New and analysis
Major Indices: Dow Jones ends 10 consecutive gain
 Interest Rate Forecasts
Commodities and Currencies: Dollar slides against
rivals
 Inflation on the rise, though interest rates
are trending downwards
Central Bank Meeting Calendar
Markets overview
Interest Rate Forecast
The Week Ahead
 Amman Stock Exchange
 Local Debt Monitor
 Prime Lending Rates
2
International
3
US Treasury bond rates
•
•
An unexpected slide in U.S. consumer sentiment
Friday deflated optimism over the economic outlook,
pushing investors into the safety net of Treasury
bonds.
The price rally sent the benchmark 10-year note's
yield below 2%, again, and wrapped up a strong week
for the U.S. government debt market.
As of March 16
1 Month
3 Months
6 Months
2 Years
5 Years
10 Years
30 Years
0.07%
0.09%
0.11%
0.25%
0.83%
1.99%
3.21%
1 Week Ago A Month Ago
0.09%
0.09%
0.11%
0.26%
0.90%
2.06%
3.26%
0.09%
0.10%
0.13%
0.27%
0.87%
2.01%
3.18%
4
US consumers are worried about future government
spending cuts
•
US consumers are unhappy with government spending cuts and
pessimistic about the job market, their finances and overall economic
growth, a survey showed on Friday.
•
The Thomson Reuters/University of Michigan preliminary sentiment
index for March fell to 71.8 from 77.6 in February. The gauge was
projected to increase to 78.
Overall, people surveyed referred unfavorably to the government's
economic policies, specifically the federal spending cuts worth $85
billion that are expected to come into effect this month.
•
•
•
•
•
February
2%
Americans also felt the pinch of spiking petrol prices that drove up
the cost of living, as the consumer price index jumped 0.7% February
month-on-month, the biggest increase since June 2009, the Labor
Department said Friday.
Core prices, which exclude the volatile food and energy sectors,
increased 0.2%, after January’s 0.3% gain.
From a year ago, both overall prices and core costs gained 2%, which
remains in line with the Fed’s target inflation rate, indicating that
broader inflation pressures remained mild.
A recent drop in gasoline prices, meanwhile, points to temporary
inflationary pressure and isn't likely to alarm Federal Reserve
officials.
5
US retail sales still strong
•
Despite the softer consumer sentiment reading, data published on
Wednesday shows that consumers shrugged off smaller paychecks and
higher gasoline prices, and stepped up spending in February.
•
Retail sales rose 1.1% to a seasonally adjusted $421.4 billion, the
Commerce Department said Wednesday. January's increase was revised
up to 0.2% from a 0.1% earlier estimate.
•
The report shows consumers absorbing the combined strains of stagnant
incomes, rising gasoline prices and a two-percentage-point increase in
the payroll tax that went into effect at the start of the year.
•
Many sustained their spending by relying on credit cards and late-arriving
tax refunds as well as saving less, a shift that sent the personal saving
rate down to its lowest point since before the 2008 recession.
•
Core sales, which exclude autos, gasoline and building materials, and
which many economists consider a better gauge of spending trends,
increased 0.4%.
•
Moreover, data on Friday pointed to a rebound in factory output in a sign
of strength in manufacturing. Industrial production rose 0.7% in
February, after a flat reading in January, figures from the Federal Reserve
showed Friday.
6
Tension ease in euro area’s bond market
•
Spanish bonds have climbed in recent sessions and
the yield demanded by investors to hold 10-year
Spanish debt instead of Italian bonds has almost
vanished, having stood as wide as 0.75 percentage
point in late February. Spanish yields were at their
lowest levels in at least 14 months on Tuesday.
•
Although
Spain
remains
in
recession,
unemployment is on the rise and the budget deficit
as a share of output is more than twice the ratio
forecast for Italy this year, Spanish debt is
benefiting from a more stable political backdrop.
•
Nevertheless, with Spain saddled with chronically
high unemployment and caught in a deep recession
that looks likely to continue well into 2013, that
trend seems to have started to reverse, as yields
began to rise on Wednesday.
•
Spain's retail sales fell for a 31st straight month in
January, data showed on Thursday, while the
country's struggling banks came under more
pressure from a court ruling making it slightly
easier for Spanish homeowners to fight evictions.
7
Auction highlights: Spain’s borrowing costs ease while
Italy’s rise after downgrade
•
Meanwhile, the yield on Spanish one-year paper fell
on Tuesday at an auction to its lowest level since
before Greece was forced to request its first bailout
in 2010.
Auction Highlights
Date
•
Following Tuesday’s success, Madrid announced an
off-calendar long-term bond sale on Thursday, which
saw solid demand, riding a wave of enthusiasm for its
debt relative to Italy's that might soon ebb as
investors look more closely at a gloomy economic
backdrop.
Spain sold €803 million of paper due 2029, 2040 and
2041 more cheaply than in recent issues of the same
bonds. The shortest yield fell to 5.224% from 5.787%.
•
On the other hand, Italian borrowing costs rose in the
first bond auction since a credit rating downgrade
last week that highlighted the economic risks of the
country’s current political stalemate.
•
The Treasury in Rome sold €5.3 billion of a 2015 note
and securities maturing in 2028 at higher borrowing
costs.
Type
13/3/2013
14/3/2013
Yield
Notes
0.794%
Down from 0.859% a t a s i mi l a r
a uction l a s t month
€3.85bn 12-mth 1.363%
Down from 1.548% a t a s i mi l a r
a uction l a s t month
€3.32bn 3-yea r
2.48%
Up from 2.3% pa i d Februa ry 13
a nd hi ghes t s i nce December
€1.98bn 6-mth
12/3/2013
•
Country Amount
Spa i n
Ital y
Spa i n
€2bn
2028
bond
4.90%
Up from 4.805% when the s a me
bonds were s ol d vi a ba nks on
Ja nua ry 15
€134m
2029
bond
5.224%
Down from 5.787% from l a s t
month. The s a l e wa s 4.1 time
s ubs cri bed
€304m
2040
bond
5.434%
Down from 5.983% i n December
€365m
2041
bond
5.432%
Down from 5.696% i n Ja nua ry
8
Auction highlights: Ireland auctions 1st new 10 year bond
since bailout
•
Reassured by Italian bonds'
resilience to the political crisis and
hoping the ECB backstop will keep
supporting high-yielding assets, the
euro zone's lower rated sovereigns
appear to see a window of
opportunity in which to issue debt.
•
Ireland sold on Wednesday its first
new benchmark 10-year bond since
soaring yields forced it to take a
bailout in 2010.
•
Irish benchmark yields were slightly
lower at 3.67%, compared with
over 15% in mid-2011.
9
EU seems slightly more open to more growth-friendly
fiscal adjustments
•
The European Council held a summit aimed at maintaining financial stability, ensuring
sound public finances, fighting unemployment especially for the young, and working on
long-term growth.
•
Ahead of the meeting the countries expressed their different views. France, Spain and
Portugal demanded more time to meet their debt cutting targets whereas Germany,
Finland and Austria required austerity.
•
The conclusions of the European Council partly gave into a slight change in thinking, with
the communique endorsing ‘short-term targeted measures to boost growth and support
job-creation, particularly for the young, and prioritizing growth-friendly investment’.
According to Financial Times this phrase was hotly debated at the summit with
particularly northern European countries objecting.
•
Nevertheless, divisions continue on how to proceed remain as German chancellor Angela
Merkel emphasized that staying on the course of austerity is still a must.
•
Moreover, euro area finance ministers agreed to extend maturities on rescue loans to
Ireland and Portugal, easing the terms on two recipients of European bailout aid in a
show of support for their commitment to austerity.
10
Cypriot bank deposits to be taxed in an unprecedented
move as part of bailout
•
Depositors in Cypriot banks will be hit with a one-off tax on their savings, as part of a €10 billion
bailout for from the eurozone and the International Monetary Fund.
•
The deal, announced early Saturday, marks the first time in the eurozone's five-year-old financial
crisis that depositors in bloc's banks will lose money. Accounts with more than €100,000 will be
taxed at 9.9%, those with less at 6.75%, raising an expected €5.8 billion for the near-bankrupt
nation.
Accounts held in Greek offshoots of Cypriot banks will also be spared.
•
•
Cyprus, which first applied for help last summer, has proved a major headache for the euro zone,
mostly because of an outsized banking sector, which has swelled to eight times the size of the
island's economy and was hit hard by a restructuring of Greek government debt last year.
Allegations of money laundering and a general election in February also hampered bailout talks.
•
An initial assessment of Cyprus's finances in January concluded it needed more than €17 billion,
including €10 billion just to stabilize its banks. That would have been an unmanageable burden for
the island, whose annual economic output is less than €18 billion and shrinking, and would have
pushed its sovereign debt to 145% of GDP.
•
As they struggled to bring down the rescue costs, eurozone finance ministers and the troika of the
European Commission, the ECB and the IMF chose to go ahead with the deposit tax despite
warnings it could unsettle savers and investors in other weak European countries.
11
Data revealed further decline in the euro area
•
Data continue to indicate that the eurozone economy is bracing
for further contraction in the first quarter of 2013, as
traditionally stronger economies such as Germany, Finland and
France suffered a greater-than-expected drop in factory output
in January.
•
Euro area industrial production declined 0.4% in January from
December, when it rose 0.9%, Eurostat said on Wednesday.
Industrial production in Germany, France and Finland also
disappointed in January as it declined 0.4%, 1.2% and 4.1%
respectively after having grown 0.8%, 0.9% and 1.3% in
December.
•
•
The decrease in January was driven by a fall in capital goods,
which indicates that investments have not picked up.
•
The European Central Bank said last week it still expected a
gradual recovery to begin during the second half of the year,
even as it predicted the eurozone's gross domestic product
would contract by 0.5%, rather than 0.3% as previously forecast.
Eurozone GDP shrank by 0.6% last year.
January
-2.1%
12
UK recession looks more likely as output drops
•
British manufacturing output fell in January at the fastest pace since
June, reinforcing fears that the economy has tipped into its third
recession since the 2008 financial crisis.
•
Manufacturing output dropped 1.5% on the month in January – and
by 3% in the 12 months to January, wiping out December's gain, the
Office for National Statistics said, compared to forecasts it would be
flat.
•
The decline in manufacturing, and downbeat GDP estimates, will add
to pressure on Chancellor George Osborne to come up with measures
to revive growth in his annual budget next week.
•
Britain's economy contracted in late 2012, endangering the
government's plans to bring its spending in line with its earnings and
contributing to the loss of the country's prized triple-A credit rating.
•
If economic activity shrinks again this quarter - as looks increasingly
likely - Britain will be back in recession.
The National Institute of Economic and Social Research (NIESR), which
last month predicted that Britain would avoid a triple-dip recession,
said on Tuesday it was now a close call. It estimated the economy
shrank 0.1% in the three months to February.
•
January
-2.9%
13
UK inflation expectations on the rise
•
The pound fell to a 2-1/2 year low against the dollar on Tuesday,
though the currency has since recovered some of its losses, and British
government bonds rallied after the weak manufacturing data, which
raised expectations for more bond buying from the Bank of England to
shore up the economy. The yield on the benchmark 10-year gilt fell
0.06 percentage points to 1.94%.
•
Central bank officials are divided over whether the U.K. economy can
absorb further stimulus without stoking inflation, which, at 2.7%
annually in January, is already expected to rise further above the BoE's
2% target this year.
•
Inflation expectations, as measured by the difference between
nominal and inflation-linked bond yields, rose to near 3.3% on
Tuesday, levels not seen since September 2008.
•
The Chancellor is considering plans to change the Bank’s remit in the
Budget to give it a more explicit growth target, with a team in the
Treasury reviewing the current mandate. This would basically alter the
2% inflation target under which the BoE operates, allowing for further
room for easing policies.
14
Japan: Kuroda approved as new BoJ governor
•
In Japan both the Lower and the Upper House have approved Haruhiko Kuroda as
governor of Bank of Japan (BoJ). The two candidates for the deputy governor positions,
Kikuo Iwata and Hiroshi Nakaso, have also been approved.
•
The new appointments will decisively shift the balance in favor of the doves on the BoJ
board.
•
The new BoJ leadership will probably want to leave a mark in connection with the next
BoJ meeting, where additional easing is now widely expected.
•
Meanwhile, Japanese core machinery orders fell 13.1% in January from the previous
month, the government said Monday, the first decline in four months, as Japan's
economic recovery has yet to gain momentum amid a recession in Europe and slower
growth in China. The fall was much larger than a median forecast of a 1.4% decline.
•
Machinery orders are widely regarded as a leading indicator of corporate capital
investment.
•
Machinery orders would have to grow 11.1% month-on-month in both February and
March just to keep the levels of orders unchanged in January-March from OctoberDecember.
15
Stocks hobbled and Dow Jones ends 10 consecutive gain
after a soft reading on consumer confidence
16
Dollar slides against rivals
17
Major Interest Rate Forecasts
Market yield
(March 16)
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
US 10-year
1.99
1.93
2.02
2.16
2.31
2.49
2.64
Fed Fund Target Rate
0.25
0.25
0.25
0.25
0.25
0.25
0.25
1.45
1.58
1.68
1.81
1.97
2.09
2.2
0.75
0.75
0.75
0.75
0.75
0.75
0.75
1.94
0.50
2.06
0.50
2.15
0.50
2.31
0.50
2.45
0.50
2.54
0.50
2.61
0.50
Rate (%)
United States
Germany
Germnay 10-year
ECB Main Refinancing Rate
United Kingdom
UK 10-year
BoE Bank Rate
Source: Bloomberg
18
The Week Ahead,,,
Economic Data Release Calendar
March 17, 2013 - March 22, 2013
Date
18-Mar Mon
19-Mar Tue
20-Mar Wed
21-Mar Thu
22-Mar Fri
Currency Event
CNY
EUR
USD
JPY
AUD
GBP
GBP
EUR
EUR
GBP
EUR
GBP
GBP
GBP
EUR
USD
USD
USD
JPY
CNY
EUR
EUR
EUR
EUR
EUR
GBP
USD
USD
USD
EUR
USD
CNY China Property Prices
EUR Euro-Zone Trade Balance s.a. (euros)
USD NAHB Housing Market Index
JPY Bank of Japan Governor Shirakawa Steps Down
AUD RBA Policy Meeting Minutes
GBP Consumer Price Index (YoY)
GBP Core Consumer Price Index (YoY)
EUR Euro-Zone ZEW Survey (Economic Sentiment)
EUR German ZEW Survey (Economic Sentiment)
GBP U.K. Chancellor Osborne Presents 2013 Budget to Parliament
EUR Euro-Zone Current Account s.a. (euros)
GBP Bank of England Minutes
GBP Jobless Claims Change
GBP ILO Unemployment Rate (3M)
EUR Euro-Zone Consumer Confidence
USD Federal Open Market Committee Rate Decision
USD Fed Releases Summary of Economic Projections
USD Fed's Bernanke Holds Press Conference in Washington
JPY Merchandise Trade Balance Total (Yen)
CNY HSBC Flash Manufacturing PMI
EUR German Purchasing Manager Index Manufacturing
EUR German Purchasing Manager Index Services
EUR Euro-Zone Purchasing Manager Index Manufacturing
EUR Euro-Zone Purchasing Manager Index Services
EUR Euro-Zone Purchasing Manager Index Composite
GBP Retail Sales (YoY)
USD Markit US PMI Preliminary
USD Existing Home Sales
USD Existing Home Sales (MoM)
EUR German IFO - Business Climate
USD Fed Revisions of Industrial Production
GMT
01:30
10:00
14:00
00:30
09:30
09:30
10:00
10:00
09:00
09:30
09:30
09:30
15:00
16:30
18:00
18:15
23:50
01:45
08:30
08:30
09:00
09:00
09:00
09:30
12:58
14:00
14:00
09:00
16:00
Forecast
Previous
47.00
12.0B
46.00
47.5
2.70%
2.30%
42.40
48.20
13.9B
-23.0
-12.5K
7.80%
-23.60
0.25%
-¥1099.4B -¥1629.4B
50.9
50.40
50.5
50.30
55.0
54.70
48.2
47.90
48.3
47.90
48.3
47.90
0.20%
4.99M
1.4%
107.50
4.92M
0.40%
107.40
19
Central Bank Meetings Calendar
Calendar for upcoming meetings of main central banks :
Current
Rate
Expected Rate
Decision
March 20
0.25%
0.25%
European Central Bank (ECB)
April 4
0.75%
0.75%
Bank of England (BoE)
April 4
0.50%
0.50%
Bank of Japan (BOJ)
April 3
0.10%
0.10%
Swiss National Bank (SNB)
June 20
0.00%
0.00%
Bank of Canada (BOC)
April 17
1.00%
1.00%
Reserve Bank of Australia (RBA)
April 3
3.00%
3.00%
Reserve Bank of New Zealand (RBNZ)
April 23
2.50%
2.50%
Central Bank
Month
US Federal Reserve (FOMC)
20
Regional
21
Egypt rules out IMF emergency funding
•
The IMF said on Monday that Egypt had the option of using the Rapid
Financing Instrument, a lending facility designed to provide rapid and
limited assistance to member countries. The RFI funds available to Egypt
would total $750m, which could help the country scrape through until
after parliamentary elections.
•
However, Egypt said on Tuesday it would not sign any "emergency" loan
with the IMF, ruling out stop-gap funding to tide it over as it struggles
with a soaring budget deficit and falling currency reserves.
•
Egypt has been seeking a full $4.8bn from the IMF instead in order to
stave off a balance of payments crisis, but securing the aid would involve
a commitment to austerity measures that are likely to lead to unrest at a
time when President Mohamed Mursi is already struggling to maintain
law and order.
•
Analysts point out that the IMF loan should provide much needed relief
because it would unblock finance from other external sources so that the
whole package would reach $14.5bn.
•
Balance of payment support has become urgent in recent weeks as the
country, which imports a large proportion of its food and fuel, has
depleted two-thirds of its foreign reserves. Those stand at $13.5 now
slightly less than the critical level of three months’ import coverage.
•
The IMF’s top official for the Middle East is expected to visit Cairo this
week to discuss Egypt’s economic program and the future the loan.
22
Egypt’s C/A deficit narrows while trade deficit grows
•
•
•
Egypt’s Central Bank announced that the current account
deficit narrowed to $3.0bn between July and December 2012,
from a shortfall of $4.1bn in the same period a year earlier.
This was due to remittances from Egyptian workers abroad,
largely in the Gulf, which rose to $9.3bn from $8.0bn a year
earlier, the bank said in a statement. Foreign direct
investment recorded a net inflow of $301.4m down from
$418.1m.
However, the trade deficit widened to $16.8bn in the last six
months of calendar 2012 from a $15.6bn deficit a year earlier
as imports picked up 3.6% but exports slipped 1.0%.
Egyptian Treasury Yields
•
In other news, Egypt said on Wednesday it was lifting a
$10,000 limit on the amount of hard currency foreigners can
bring across its borders, easing some of the controls imposed
in late 2012 as its economic crisis worsened.
14.2%
14.0%
Yields as of 17/03
13.8%
13.6%
13.4%
•
Egypt had tightened currency controls in December, worried
about sharp falls in its pound currency and a rush by
Egyptians to withdraw their savings from banks.
13.2%
13.0%
12.8%
3M
•
Egypt will also increase a departure tax for foreigners from to
$20 from to $15 starting on May 1. All this is done in an effort
to boost foreign currency reserves.
6M
9M
12M
23
GCC new highlights
GCC Sovereign Wealth Funds $1.7 trillion
•
GCC Sovereign Wealth Funds assets put at $1.7 trillion:
According to Moody's investor service, strong oil prices
have sharply widen the fiscal surpluses in Gulf hydrocarbon
producers and this boosted the assets of their government
funds to an all time high of around $1.7 trillion at the end of
2012. At the end of 2007, this stood at only $1.0 trillion.
•
In its report, Moody’s state that the GCC economies have
benefited from large foreign-exchange inflows driven by oil
revenues, adding that some of the windfall has been spent
through the governments' fiscal accounts while the rest
was placed in SWFs, reinforcing their financial strength.
•
All GCC countries are likely to have a positive net
international investment position (IIP). It said the funds
compare to an aggregate central government debt level of
$2363 billion at the end of 2012. But it added that the debt
levels vary greatly across countries, with Bahrain, the UAE
and Qatar having government debt in excess of 20 per cent
of their GDP, most of which is domestically funded.
24
GCC new highlights
GCC economic growth to moderate in 2013
•
•
GCC economic growth to moderate in 2013 : GCC economic growth is set to slow to 3.6% in 2013
from 5.4% in 2012 as the three-year surge in regional oil production comes to an end, NBK said in its
"GCC Economic Outlook". However, on the ground, business conditions are expected to remain solid
as governments maintain elevated levels of investment and social spending, which will ultimately
support confidence and private sector activity.
Over the medium-term, major economic reforms in areas such as the labor market, education, and
competition policy are needed to enable the private sector to grow more independently of state
support. In addition, despite healthy rates of economic growth, GCC inflation remains low.
•
Kuwait's records KD16.1 billion surplus: Strong crude prices allowed Kuwait to record a large surplus
in the first nine months of the current fiscal year as was the case in the previous few years. The
surplus, equivalent to 33% of annual 2012 GDP, was lifted by a combination of soaring revenues and
comparatively softer spending growth. Total revenues climbed to KD 24.3 billion in the first nine
months of FY 2012/2013, about KD 2.8 billion higher than a year ago.
•
Kuwaiti government plans to cut subsidies to all Kuwaitis, expats - VAT, income taxes soon: MP
Nasser Al-Merri has recently proposed scrapping of subsidy to all Kuwaitis and expats and advised the
government to instead improve the services and provide subsidy to Kuwaitis only on basic necessities
such as electricity, water and fuel. In addition, he proposed implement value added and income tax.
The state's budget for the fiscal year 2012/2013 lists the total government subsidy for consumer
services at KD 6.3 billion, KD 3.1 billion of which goes towards electricity and KD 1.1 billion towards
fuel.
25
GCC Economic News Highlights
Mixed inflation readings for GCC area
•
Annual inflation in the United Arab Emirates rose to 0.73% in February, up from
0.43% in January, mainly due to higher food and beverage prices, according to the
country's national bureau of statistics.
While the food and beverages components posted a rise, the increase was mitigated
somewhat by a slight fall in housing prices, data showed. The housing category
makes up nearly 40% of the U.A.E.'s CPI basket.
U.A.E.'s economy minister in January said he expects inflation to range between 1%
and 1.5% this year. Inflation in the U.A.E. has remained subdued in the past few
months, but a strengthening economy is expected to boost demand--especially in
the housing sector, which may eventually lead to higher inflation, some analysts say.
•
Rising rents, food prices push inflation rate up to 3.2% in Qatar: Year-on-year
inflation rose to 3.2% in February with house rent showing a disturbing upward
trajectory, rising 4.8% since February 2012, official data released last week shows.
Rents, clubbed with fuel and energy, have a share of 32% in consumer expenses,
though, show no increase month-on-month. Entertainment (recreation and culture)
made the largest dent in household and individual's budgets as they became 7.6%
more expensive in a year since February 2012. Medical care also increased by 2.2%
YoY.
•
Saudi Arabia's Cost-of-Living Index Up 0.2% in February Vs January: Saudi Arabia's
monthly cost-of-living index rose 0.2% in February compared with the previous
month, the Saudi Central Department of Statistics and Information said in a report on
Saturday. The rise was mainly driven by increases in the prices of foodstuff and
beverages, home furniture, and vehicles.
26
GCC Interbank Rates
27
Comparative MENA Markets
For the period 10/03 – 15/03
28
Locally
29
Local interest rates forecasts and major developments
Rate (%)
Jordan
2-year Treasury
Market yield
(March 17)
Q1 2013
Q2 2013
Q3 2013
Q4 2013
7.95
7.95
7.65
7.85
8.00
Previous forecast
Window Rate
7.95
4.00
7.95
4.00
7.75
4.00
7.95
4.25
8.25
4.25
Source: CAB forecasts
•
Our interest rate forecast for 2 years
government bonds was revised lower
mainly due to reverse dollarization
which results in higher excess JOD
liquidity.
•
Foreign reserves have also continued
its upward trend reaching $ 8.30 billion
last week.
30
Inflation surged above 7.0% during the first two
months of the year
•
According to figures released by the Department of Statistics, inflation
rates reached 7.23% during the first 2 months of 2013, compared to
the same period last year, where inflation was around 3.5%.
•
Among the main commodities groups which contributed to this
increase were:
–
–
–
–
–
Transportation (20.30%)
Fuel and Electricity (24.90%)
Meat and Dairy (8.20%)
Fruits and Vegetables (20.50%)
Rent (2.60%)
•
As for February, inflation increased by 7.75% year-on-year, up from
6.7% in January.
•
Forecasts by international agencies expect crude oil prices to fall
throughout the 4 quarters of the year.
•
Despite that, after recent talks with the IMF, the Jordanian
government is still expected to increase electricity and water tariffs
during the second quarter of the year, which would cause upward
pressure on inflation rates.
•
Therefore, inflation rates are expected to remain above 7.0% during
the upcoming months.
31
Downward Pressure on Interest Rates
•
Recently, it seems that interest rates are trending downwards. During the last
couple of 3-year government bond auctions, the yield fell to 8.52% and then
8.46%, even though coverage ratios remained high at 1.95 and 1.93, respectively.
•
This indicates that interest rates are expect to fall in the upcoming months.
In 2013
Sum of new
issuances: JD 822
million
Jordanian
Government
Sum of bonds
redeemed till today:
JD 895 million
Net: JD 73 million
•
This year, the government is expected to depend on external borrowing instead of
internal to meet financing needs. Of all borrowing, external borrowing will make
up 65% this year.
32
Amman Stock Exchange
For the period 10/03 – 14/03
ASE free float shares’ price index ended the week at
(2070.8) points, compared to (2059.9) points for the last
week, posting a decrease of 0.53%. The total trading
volume during the week reached JD(71.4) million compared
to JD(78.9) million during the last week. Trading a total of
(86.3) million shares through (32,279) transactions
The shares of (179) companies were traded, the shares
prices of (69) companies rose, and the shares prices of (79)
declined.
Top 5 losers for the last week
Top 5 gainers for the last week
Stock
% chg
The Investors And Eastern Arab For Industrial And Real Estate
Investments
33.33%
Comprehensive Multiple Project Company
24.49%
Union Investment Corporation
22.22%
Arab Real Estate Development
United Arab Investors
Stock
% chg
Al-quds Ready Mix
(13.89%)
Jordan French Insurance
(12.12%)
Northern Cement Co.
(11.37%)
20.00%
Jordan Loan Guarantee Corporation
(10.71%)
20.00%
Emmar Investments & Realestate Development
(10.53%)
33
Local Debt Monitor
Latest T-Bills

As March 17, the volume of excess reserves, including the overnight window deposits held at the CBJ
JD(2,116) million.
3 months T-Bills
Issue Date
Maturity Date
Size - million
Yield (%)
29/2011
14/12/2011
14/03/2012
50
2.898%
28/2011
12/12/2011
12/03/2012
50
2.844%
6 months T-Bills
Issue Date
Maturity Date
Size - million
Yield (%)
02/2012
14/02/2012
14/08/2012
50
3.788%
01/2012
23/01/2012
23/01/2012
50
3.433%
27/2011
08/12/2011
08/06/2012
50
3.232%
9 months T-Bills
Issue Date
Maturity Date
Size - million
Yield (%)
05/2012
04/03/2012
04/12/2012
75
4.285%
04/2012
29/02/2012
29/11/2012
75
4.229%
03/2012
22/02/2012
22/11/2012
75
4.169%
1 year T-Bills
Issue Date
Maturity Date
Size - Million
Coupon (%)
03/2013
26/02/2012
26/02/2014
70
6.750%
02/2013
14/02/2012
14/02/2014
50
6.750%
01/2013
27/01/2012
27/01/2014
70
6.750%
22/2012
24/12/2012
24/12/2013
60
6.750%
34
Local Debt Monitor
Latest T-Bonds Issues
2 years T-Bonds
Issue Date
Maturity Date
Size - million
Coupon (%)
T0813
18/02/2013
18/02/2015
80
7.950%
T0513
05/02/2013
05/02/2015
60
7.950%
T0313
29/01/2013
29/01/2015
70
7.950%
3 years T-Bonds
Issue Date
Maturity Date
Size - million
Coupon (%)
T1413
17/03/2013
17/03/2016
75
8.459%
T1313
13/03/2013
13/03/2016
75
8.520%
T1213
11/03/2013
11/03/2016
6075
8.558%
4 year T-Bonds
Issue Date
Maturity Date
Size - million
Coupon (%)
T0312
15/01/2012
15/01/2016
37.5
7.246%
T4211
16/11/2011
16/11/2015
50
6.475%
5 years T-Bonds
Issue Date
Maturity Date
Size - million
Coupon (%)
T0712
11/03/2012
11/03/2017
75
7.750%
T0412
19/01/2012
19/01/2017
50
7.489%
Public Utility Bonds
Issue Date
Maturity Date
Size - million
Coupon (%)
PB55 (Water Authority)
05/09/2012
05/09/2015
26
8.134%
PB005 (Housing & Urban Development)
29/07/2012
29/07/2015
20
7.966%
PBO12 (National Electricity)
26/04/2012
26/04/2017
150
7.724%
35
Prime Lending Rates
36
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
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37