Transcript Local Debt Monitor

Interest Rate Monitor
June 2, 2013
Brief Overview
International
US: Yields extend gains as consumer confidence rises
to highest level since 2007
MENA Region
Egypt: Fiscal deficit continues to widen
Eurozone: Support for peripheral bond market
continues, despite little hope for eurozone recovery
GCC News Highlights
OECD cuts world growth outlook
IMF: Arab spring nations face delayed
UK: Likely to continue commitment to meeting deficit
targets
GCC interbank rates
Japan: Volatility in stocks and bond markets continues
Comparative MENA Markets
China: Manufacturing accelerates offering some hope,
as IMF cuts growth forecast
Markets overview
Major Indices: Stocks end strong May with a sell-off
Commodities and Currencies: Gold drops amid
economic recovery
Local Economy
New and analysis
 FX reserves increase significantly to around
$10 billion as of end-May
speculation about Fed tapering
Central Bank Meeting Calendar
Markets overview
 Amman Stock Exchange
Interest Rate Forecast
 Local Debt Monitor
The Week Ahead
 Prime Lending Rates
2
International
3
Treasuries monthly loss is biggest in 3 years as Fed
considers tapering
•
Treasuries recorded the steepest monthly loss since 2009
amid speculation the Federal Reserve could curtail its
unprecedented monetary stimulus program if recent
improvement in domestic economic data is sustainable.
•
The 10-year yield surged 46bp since April 30, the most since
jumping 50bp in December 2010.
•
Yields extended gains Friday after a report showed consumer
confidence rose in May to the highest level since 2007.
•
The yield on 10-year Treasury notes rose 12 basis points this
week to 2.13%.
As of May 31
1 Month
3 Months
6 Months
2 Years
5 Years
10 Years
30 Years
0.02%
0.04%
0.07%
0.30%
1.02%
2.13%
3.28%
1 Week Ago A Month Ago
0.02%
0.04%
0.08%
0.25%
0.89%
2.01%
3.18%
0.03%
0.06%
0.08%
0.20%
0.65%
1.63%
2.84%
4
U.S. consumer spending falls as inflation remains subdued,
adding to QE tapering debate
•
U.S. consumer spending unexpectedly fell in April for the first time in
almost a year and inflation pressures were subdued, pointing to a
slowdown in economic activity that could dampen market speculation
that the Fed might start scaling back monetary easing.
•
Purchases fell 0.2% after a 0.1% gain in March that was smaller than
previously estimated, a Commerce Department report showed Friday.
•
One reason consumers may have pulled back is weak income data,
which was unchanged when adjusting for inflation.
•
Moreover, overall prices fell 0.3% last month after dipping 0.1% in
March. A core reading that strips out food and energy costs was flat
after rising 0.1% the prior month.
•
Over the past 12 months, inflation has risen just 0.7%, the smallest
gain since October 2009 and pushing further below the Federal
Reserve's 2% target. The index had increased 1.0% in the period
through March.
•
Core prices are up 1.1%, the smallest rise since March 2011 and
slowing from 1.2% in March.
5
Possible headwinds to U.S. recovery remain, but recovery is
still expected to pick up in the second half of the year
•
There have been fears among economists that the cutback
in federal spending and the expiration of some tax breaks
that took place earlier this year would prove to be a drag on
the economy this year. Friday's report could be another
warning sign of those economic headwinds.
•
Meanwhile, the U.S. economy grew at a slightly slower pace
than originally reported in the first quarter, according to
revisions released by the Commerce Department on
Thursday.
•
The revisions show that gross domestic product rose at a
2.4% annual pace in the first three months of the year,
down slightly from the 2.5% pace originally reported last
month
•
Growth is expected to ease this quarter to a 1.6%
annualized rate, but the second half will show
improvement, with GDP projected to climb at an average
pace of 2.4%.
6
Consumer sentiment in U.S. rises to highest since July 2007,
signaling that the U.S. economy is getting better
•
On the other hand, consumer confidence rose in May to the highest level in almost six
years as a rising stock market and property values helped lift Americans’ outlook on the
economy.
•
The Thomson Reuters/University of Michigan final index of sentiment increased to 84.5 in
May, the strongest since July 2007, from 76.4 a month earlier.
•
The increase in personal wealth from higher real-estate values and stock prices that’s
bolstering sentiment may help keep consumer spending from faltering after a decline in
April.
•
Housing activity is recovering from low levels. A report this week showed that home prices
surged during the first quarter at their fastest pace in nearly seven years, the latest sign of a
sustained warm-up in an economic recovery that has otherwise been marked by starts and
stops.
•
Home prices in March rose by 10.9% from a year earlier, the largest such gain in seven
years, according to the Case/Shiller index tracking home prices in 20 U.S. cities.
•
The housing-market revival—and the accompanying report on consumer confidence—adds
new fuel for a debate inside the Fed about how far to push its easy-money policies.
•
Thus, uncertainty regarding the debate about tapering quantitative easing, but it does
seem that despite some weak data, the Fed is moving closer to the exit as data and
fundamentals in the U.S. improve.
7
Volatility in peripheral bonds rises, but support for market
continues
•
Peripheral bond markets continue to do
well despite the rise in volatility. Ample
liquidity, search for yield and improving
fundamentals will continue to support
peripheral bond markets.
•
Italy’s and Spain’s 10-year yield rose 2bp
over the week to 4.44% and 4.16%
respectively Friday.
•
Meanwhile, the Bund yield slipped 1bp on
Friday but it finished the week 7bp higher at
1.50%.
•
Similarly France’s 10-year yield fell 3bp
Friday, but rose 13bp during the week to
2.07%.
•
Over the past week, the EU Commission
removed Italy from the ‘list of sinners’ as
the budget deficit is now below the 3%
limit. France and Spain were given two
more years to reach the limit.
8
European Commission gives more leeway with austerity
•
The European Commission has given several eurozone governments
breathing space to reduce their deficits to the mandated 3% of GDP limit,
as worries about wavering public support for economic reform intensify
amid a bleak near-term outlook for the eurozone.
•
The commission on Wednesday proposed giving France, Spain, Poland and
Slovenia two extra years to hit the 3% threshold, and proposed giving the
Netherlands and Portugal one extra year.
•
Moreover, the commission removed Italy from its list of countries that
exceed the 3% limit. But the Italian government still has a long list of
overhauls to pass.
•
In return, EU authorities handed politicians in those nations some
unpleasant homework: overhauls of labor markets, pension systems and
other programs that threaten to arouse domestic opposition.
•
Officials are insisting on these changes as the price for relaxing mandates
to reduce government budget deficits.
•
The prospect of broad structural reforms is also aimed at easing concerns
among a group of northern countries, led by Germany, about the idea of
giving member nations more time to bring their deficits in line with EU
rules, which generally limit deficits to 3% of annual economic output.
9
Eurozone data provides little evidence of recovery
•
The eurozone economy showed further signs of
deterioration as unemployment hit a fresh record and retail
spending fell in the bloc's largest economies, offering little
hope the region's longest postwar recession will end soon.
•
The unemployment rate across the eurozone rose to 12.2%
in April, the highest rate since records began in 1995, up
from 12.1% in March, Eurostat said Friday.
•
The number of unemployed rose 95,000 to 19.4 million,
Eurostat said. Analysts expect that figure to top 20 million
later this year.
•
The unemployment rise "highlights the fact that the
eurozone continues to face major headwinds and still has its
work cut out to return to growth.
•
The report underscored deep divisions within the 17member euro zone. Unemployment was just 4.9% in Austria
and 5.4% in Germany. It was nearly 18% in Portugal and
more than 25% in Spain and Greece.
•
Higher taxes and reduced state spending in southern Europe
have exacerbated already deep recessions, pushing
joblessness sharply higher.
10
Low inflation underpins the region’s pain
•
With new jobs scarce in much of the eurozone, consumer
confidence and spending will likely remain under pressure. In
France, where joblessness has risen sharply in recent months, retail
sales fell 0.3% in April from March. Even in Germany, where
unemployment remains near record lows, retail sales fell 0.4% in
April.
•
The spending data from the bloc's two largest economies suggest
that, outside of exports, there are few sources of growth that could
lift the region out of a recession that started in late 2011.
•
With the eurozone in its longest recession since its creation,
consumer price inflation was far below the ECB's target of just
below 2%, coming in at 1.4% in May, slightly above April's 1.2% rate.
•
That rise may diminish concerns about deflation, but the deepening
unemployment crisis remains a threat to the region’s recovery.
•
The ECB is expected by most analysts to leave its key interest rate
unchanged at 0.5% when it meets next week, but leave open the
possibility of future stimulus measures if conditions fail to improve.
•
An interest rate cut is likely at the bank's July meeting given the
subdued economy and tame price pressures.
11
OECD cuts world growth outlook, amid grim economic
forecasts for Europe
•
In its twice-yearly Economic Outlook, the Organization for Economic
Cooperation and Development forecast the world economy would
grow 3.1% this year before accelerating to 4% in 2014.
•
The estimates marked a slightly more pessimistic view after in
November the Paris-based think tank forecast global growth of 3.4%
this year and 4.2% next year.
•
The U.S. was seen driving global growth with the world's biggest
economy projected to expand 1.9% this year and then accelerating to
2.8% in 2014, which would be the country's best rate since 2005.
•
In contrast, the eurozone was estimated to remain in recession for a
second year. The OECD sees its economy contracting 0.6% in 2013,
instead of the slight 0.1% contraction the OECD forecast in November,
and then returning to growth next year with a rate of 1.1%.
•
Lifting its estimate for Japan, the OECD said that the central bank's
pledge to ramp up its monetary stimulus aggressively would help its
economy grow 1.6% this year.
•
The OECD took a more pessimistic view on China, forecasting that its
economy would grow 7.8% this year, down from a previous estimate
of 8.5%.
12
OECD places most of the burden on the shoulders of
central banks
•
With economies in most countries still in recovery mode, the OECD said central banks
should keep monetary policies easy, while the European Central Bank should dramatically
step up its efforts to get credit flowing to the economy, as high debt levels leave little
room for governments to use fiscal policy to stimulate growth.
•
The OECD called on the ECB to make banks pay for holding deposits with it and urged it to
buy assets such as securitized loans from credit-starved small and medium-sized firms,
two options ECB policymakers say they are currently considering.
•
The OECD said Japan's quantitative easing is overdue and in the U.S. monetary policy
should remain "exceptionally accommodative" for some time to come, with a policy
reversal happening only very gradually to minimize volatility on global markets.
•
While putting the emphasis on monetary policy, the OECD also said governments, and
particularly the U.S., could tweak fiscal consolidation instead of cuts across the board. This
would be more growth-friendly by, for example, avoiding cuts to investment and focusing
more on cutting subsidies.
•
Historically high unemployment remains the most serious challenge facing governments,
it observed. The OECD warned governments that urgent action must be taken to reduce
unemployment, which has risen to dangerous levels in many countries.
13
EU expects the U.K. to stick to reducing its deficit
•
The European Commission told the U.K. government on Wednesday that
its budget-deficit reduction program was lagging behind schedule and
that it should seek to raise additional revenue by making changes to the
sales tax.
•
The commission said the U.K. should aim to reduce its deficit to 3% of
gross domestic product by 2014-2015, a target the country is now
expected to miss.
•
The commission's recommendation may put it at odds with other
international organizations—such as the OECD and the IMF—that have
advised the U.K. to either keep or slow the current pace of its deficitreduction policies. Earlier Wednesday, the OECD said the pace at which
the U.K. was shrinking its deficit—about 1% of GDP a year—was
appropriate and should be implemented as planned.
•
The independent Office for Budget Responsibility, which sets the U.K.
government's forecasts, projects the budget deficit will be 5.9% of GDP
in 2014-15 and won't reach the 3% target until 2017-18, when the deficit
will be 2.2% of GDP.
•
Although the U.K. has continued to implement the austerity program
that it launched in 2010, the deficit hasn't fallen as quickly as expected
because of lackluster economic conditions that led to higher spending on
social benefits, such as unemployment, and lower tax revenues, the
commission said.
14
Volatility continues as the Japanese stock market loses
momentum and interest rates rise
•
Focus remains on increased market volatility as the sell-off in the
Japanese stock market continued over the past week, and long-term
interest rates yields remain higher than they were at the end of
March despite the Bank of Japan's large-scale efforts to keep them
down.
•
Nevertheless, data in Japan continued to show strength as PMI
manufacturing rose further and industrial production rose strongly in
April. Interestingly, the deflationary pressures are also easing. Core
CPI in April was -0.4% following -0.5% in March
•
Meanwhile, Japan's government said Wednesday it would announce
next week its draft road map for a comprehensive three-year
economic overhaul, as Prime Minister Shinzo Abe tries to convince
potentially skeptical investors about his vision for ending years of
deflationary pressures.
•
The release of the third pillar of Mr. Abe's economic revival plan—
alongside aggressive monetary easing and fiscal stimulus—will be the
first test of whether the stock market rally over the past six months
under the Abe administration was based on reality or merely inflated
expectations.
15
China manufacturing accelerates, offering some comfort
•
China’s manufacturing unexpectedly accelerated in May, indicating a
slowdown in economic growth in the first quarter may be stabilizing.
•
The Purchasing Managers’ Index rose to 50.8 from 50.6 in April, the
National Bureau of Statistics and China Federation of Logistics and
Purchasing said in Beijing today. That was higher than all expectations
and above the 50 mark, the dividing line between expansion and
contraction.
•
The report may provide some comfort to policy makers after the
preliminary reading of a private manufacturing survey released May
23 pointed to the first contraction in seven months.
•
Premier Li Keqiang said this week that government measures to
reform the economy will be accompanied by tapered-off levels of
growth and warned last month new stimulus would create risks.
•
The preliminary reading of a Purchasing Managers’ Index released by
HSBC and Markit Economics fell to 49.6 in May from 50.4 in April. The
drop, if confirmed by the final figure on June 3, will be the first
reading below 50 since October.
16
IMF lowers China growth forecast to 7.7%
•
The International Monetary Fund lowered expectations for growth in China, an outlook
that has raised questions over whether Beijing will return to stimulus to support the
economy.
•
The Fund also cautioned about China's rising debt levels and a surge in credit, which it
warned could be plowed into inefficient uses if it isn't properly managed.
•
Speaking at a briefing in Beijing at the end of the IMF's annual review of the Chinese
economy, IMF First Deputy Managing Director David Lipton said the Fund lowered its
growth forecast for the Chinese economy this year to around 7.75% from an earlier forecast
of 8%. He cited sluggishness in the global economy, which hurts demand for China's
exports.
•
This follows a series of downgrades from economists at global banks who believe the
world’s second-largest economy is slowing more than expected.
•
Nevertheless, Mr. Lipton stressed that the new forecast still puts the Chinese economy at a
brisk growth rate and that Beijing still has the ability to respond to surprises. The IMF's new
forecast puts China's growth higher than the official 7.5% target, and the Fund expects the
pace of the economy should "pick up moderately" in the second half, as the recent credit
expansion takes hold.
•
Still, Mr. Lipton said, Beijing may have less room to maneuver than before. "While China
still has significant policy space and financial capacity to maintain stability even in the face
of adverse shocks, the margins of safety are narrowing," he said.
17
Stocks end strong May with a sell-off
18
Gold falls on Fed stimulus speculation
19
Major Interest Rate Forecasts
Rate (%)
Market yield
Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q2 2014
(May 31)
United States
US 10-year
2.13
1.88
2.01
2.20
2.39
2.58
2.69
Fed Fund Target Rate
0.25
0.25
0.25
0.25
0.25
0.25
0.25
1.50
1.37
1.52
1.67
1.73
1.86
2.06
0.50
0.50
0.50
0.50
0.50
0.50
0.50
2.00
0.50
1.89
0.50
2.03
0.50
2.16
0.50
2.33
0.50
2.36
0.50
2.46
0.50
Germany
Germnay 10-year
ECB Main Refinancing Rate
United Kingdom
UK 10-year
BoE Bank Rate
Source: Bloomberg
20
The Week Ahead,,,
Date
2-Jun Sun
3-Jun Mon
4-Jun Tue
5-Jun Wed
6-Jun Thu
7-Jun Fri
Economic Data Release Calendar
June 2, 2013 - June 7, 2013
Currency / Event
CNY Non-manufacturing PMI
CNY HSBC Manufacturing PMI
EUR German Purchasing Manager Index Manufacturing
EUR Euro-Zone Purchasing Manager Index Manufacturing
GBP Purchasing Manager Index Manufacturing
USD Markit US PMI Final
USD ISM Manufacturing
AUD Reserve Bank of Australia Rate Decision
GBP Purchasing Manager Index Construction
USD Trade Balance
AUD Gross Domestic Product (YoY) (1Q)
CNY HSBC Services PMI
EUR German Purchasing Manager Index Services
EUR Euro-Zone Purchasing Manager Index Services
EUR Euro-Zone Purchasing Manager Index Composite
GBP Purchasing Manager Index Services
EUR Euro-Zone Gross Domestic Product s.a. (YoY) (1Q)
EUR Euro-Zone Retail Sales (YoY)
USD ADP Employment Change
USD Factory Orders
USD ISM Non-Manufacutring Composite
USD US Federal Reserve Releases Beige Book
AUD Trade Balance (Australian dollar)
EUR German Factory Orders n.s.a. (YoY)
GBP Bank of England Rate Decision
GBP BOE Asset Purchase Target
EUR European Central Bank Rate Decision
EUR ECB Deposit Facility Rate
USD Initial Jobless Claims
EUR German Trade Balance (euros)
EUR German Exports s.a. (MoM)
GBP BoE/GfK Inflation Next 12 Mths
GBP Total Trade Balance (Pounds)
EUR German Industrial Production n.s.a. and w.d.a. (YoY)
USD Unemployment Rate
USD Change in Non-farm Payrolls
GMT
01:00
01:45
07:55
08:00
08:30
12:58
14:00
04:30
08:30
12:30
01:30
01:45
07:55
08:00
08:00
08:30
09:00
09:00
12:15
14:00
14:00
18:00
01:30
10:00
11:00
11:00
11:45
11:45
12:30
06:00
06:00
08:30
08:30
10:00
12:30
12:30
Forecast
49.60
49.00
47.80
50.10
52.00
50.50
2.75%
49.60
-$41.0B
2.70%
49.80
47.50
53.20
-1.00%
-0.60%
170K
1.40%
53.50
180M
-0.20%
0.50%
375B
0.50%
0.00%
345K
17.0B
-0.80%
-£3000
-0.80%
7.50%
168K
Previous
54.50
50.40
49.00
47.80
49.80
52.00
50.70
2.75%
49.40
-$38.8B
3.10%
51.10
49.80
47.50
47.70
52.90
-1.00%
-2.40%
119K
-4.00%
53.10
307M
-0.40%
0.50%
375B
0.50%
0.00%
354K
18.8B
0.50%
3.60%
-£3130
-2.50%
7.50%
165K
21
Central Bank Meetings Calendar
Calendar for upcoming meetings of main central banks :
Central Bank
Month
Current Rate
Expected Rate
Decision
US Federal Reserve (FOMC)
June 19
0.25%
0.25%
European Central Bank (ECB)
June 6
0.50%
0.50%
Bank of England (BoE)
June 6
0.50%
0.50%
Bank of Japan (BOJ)
June 10
0.10%
0.10%
Swiss National Bank (SNB)
June 20
0.00%
0.00%
Bank of Canada (BOC)
July 17
1.00%
1.00%
Reserve Bank of Australia (RBA)
June 4
2.75%
2.75%
Reserve Bank of New Zealand (RBNZ)
June 12
2.50%
2.50%
22
Regional
23
Egypt July-April Budget Deficit Widens to 184.8 Billion
Pounds
•
Egypt’s July-April budget deficit widened to 184.8 billion pounds,
compared to 117.8 billion pound for the same period last year.
•
Moreover, the primary deficit to GDP increased to 3.9% during JulyApril 2012/2013, compared to 1.9% during the period July- April
2011/2012.
•
The actual deficit as a proportion of GDP had reached 5.1% halfway
through the current fiscal year, rising to 6.7% after seven months, 8.2%
after eight months and 10.1% in the July-March period.
•
Despite the slowdown in the rate of deficit accumulation in April, the
government still looks highly likely to miss its full-year deficit target of
10.7% of GDP (agreed with the IMF), especially given the typical
stacking of spending bills at the end of the year.
•
The figures for April show that total revenue rose by 15.3% month on
month, whereas expenditure increased by 10.7%.
Source: Bloomberg
•
The relatively slower rate of increase in expenditure was achieved
partly because of only modest month-on-month increases in subsidies
and investment. This may have been helped by the slowdown in the
depreciation of the Egyptian pound during April.
24
GCC Economic Highlights:
S&P raises Saudi’s long-term sovereign credit rating outlook
•
Standard & Poor’s has upgraded Saudi Arabia’s long-term
sovereign credit rating outlook from “stable” to “positive”.
•
Standard & Poor’s also affirmed the long-term and short-term
local currency sovereign credit ratings at “AA-/A-1+”.
•
“Growth fundamentals are strengthening in Saudi Arabia,” the
rating company said in a statement. “The economy has
expanded strongly and steadily.”
•
S&P’s new credit rating outlook for Saudi Arabia was issued just
one day after Saudi Finance Minister Ibrahim Al-Assaf criticized
international forecasts of the Kingdom’s growth rates, saying
these were too low.
•
The IMF estimated that Saudi Arabia will register a growth rate
of 4.4% for this year, however, Saudi officials believe that this is
an underestimate as the positive evaluations issued by the
world’s largest credit rating agencies confirm confidence in the
strength and durability of the Saudi economy.
25
GCC Economic Highlights:
UAE balance of payment surplus soars in 2012
•
An increase in oil prices boosted the UAE's balance of payment
(BoP) surplus by more than 100% in 2012 despite a sharp rise in
imports and capital outflow by the private sector, according to
official data.
•
Total hydrocarbon exports peaked at around Dh433 billion
($117.89 billion) last year compared with Dh409 billion ($111.35
billion) in 2011 after oil prices hit an all time high of nearly $110 a
barrel.
•
This widened the current account balance to a record high of
Dh244.4 billion from Dh187.1 billion despite a surge in imports to
nearly Dh814.8 billion from Dh717.7 billion.
•
As a result, the UAE's balance of payment recorded one of its
highest surpluses of nearly Dh36.6 billion ($996.46 million) in
2012 compared with Dh16.2 billion ($441.06 billion) in 2011.
•
The gap was mainly a result of a sharp rise in private capital
outflow to nearly Dh30.7 billion last year compared with an
inflow of Dh2.8 billion in 2011.
26
OPEC oil exporters agree to keep output the same, as a
shale oil boom sparks added competition
•
OPEC oil exporters agreed to leave output policy unchanged on
Friday as oil held around the group's preferred level of $100 a
barrel.
•
The Organization of the Petroleum Exporting Countries will retain its
30 million barrels per day (bpd) production target for the rest of this
year, said Venezuelan Oil Minister Rafael Ramirez, after a swift
meeting at OPEC headquarters.
•
OPEC has little room to pump more oil due to the U.S. shale oil
boom that has sparked competition for market share in Asia and set
off a rivalry between its top two producers Saudi Arabia and Iraq.
•
Gulf producers, led by OPEC heavyweight Saudi Arabia, think that
OPEC will still be able to pump at least 30 million bpd, provided U.S.
shale grows at a moderate pace.
•
But oil above $100 has also freed U.S. shale oil in North Dakota and
Texas - which competes with OPEC crude of similar, light quality
from Nigeria and Algeria, rather than heavier Saudi output.
•
Nigeria, along with Algeria, has already felt pressured by the U.S. oil
boom, losing ground in its most lucrative export market and
diverting sales to Asia.
27
IMF: Arab spring nations face delayed economic recovery
•
Arab spring countries face rising social tensions that could thwart an early economic
recovery from over two years of political turmoil that has worsened fiscal pressures and
threatens macroeconomic stability, Ahmed Masoud, the IMF director for the MENA region
said at the end of the World Economic Forum that concluded in Jordan.
•
Moreover, Arab states have made little progress in tackling unemployment, consumer
subsidies and other chronic problems that are undermining competitiveness and stifling
growth.
•
Oil importers are growing at about 3%, which is a bit better than last year, but nowhere
near levels needed to generate enough jobs for new entries let alone decrease
unemployment.
•
The IMF used the WEF to reiterate the need for Arab countries to cut their energy
subsidies, which are estimated to total around $40 billion annually. The subsidies are
becoming more unaffordable in view of falling oil exports and slowdown in growth.
•
Masoud added that oil importers Morocco, Tunisia, Egypt and Jordan faced the double
shocks of high energy and food import bills and the impact of a global economic
downturn. Hit by protests, the situation was exacerbated by extra spending on food and
energy subsidies that forced governments to draw on foreign reserves and expand
domestic borrowing at high interest rates that raised public debt.
28
GCC interbank rates
Source: Bloomberg
29
Comparative MENA Markets
For the period 26/05 – 31/05
30
Locally
31
Jordan’s FX reserves close to $10 billion
•
Last week, the central bank announced that its FX
reserves reached $9.7 billion, increasing significantly
by around $3 billion since the end of 2012.
•
This increase means that FX reserves now cover just
above 5 months of imports, and is well above the 3
month benchmark set by the IMF.
•
Breaking down the increase, CAB’s estimates found
that foreign grants accounted for $1.7 billion of the
increase, while the reversal of the dollarization wave
accounted for $1.3 billion.
•
On the other hand, the balance of payments deficit
caused by imports accounted for an outflow of $800
million.
•
Reserves are still expected to increase this year as the
government asserted once again that it plans on
auctioning a U.S. Treasury guaranteed $1.5-2.0 billion
bond, sometime later this year.
CAB’s estimates:
32
Jordan is still expected to raise electricity tariffs
•
Prime Minister Abdullah Ensour on Tuesday said the government will
imminently lift electricity subsidies, noting that such a move is crucial to
curb the budget deficit.
•
Additionally , Masood Ahmed, director of the IMF's Middle East and Central
Asia Department, reiterated the government is expected to remove
subsidies on electricity prices to stop financial losses of the state-owned
power company, starting July of this year.
•
The government estimates the 2013 electricity subsidies bill at over JD1.3
billion, which represents a significant amount of the overall budget deficit.
•
Ensour noted that the supply of Egyptian gas to Jordan is still not stable, as
the Egyptian government is seeking to reduce the amount it exports to
Jordan from 140 million cubic feet currently to less than 100 million cubic
feet.
•
In other news, the Jordanian government has urged the UN Security Council
to address the growing humanitarian crisis arising form the influx of Syrian
refugees, highlighting that hosting the refugee community is set to cost
Jordan some $1.5 billion in 2013 alone.
•
Jordan has opened its borders to over 540,000 Syrians since the onset of
the conflict in March 2011 -- a number UN officials expect to surpass 1.2
million before the end of the year.
33
Amman Stock Exchange
For the period 26/05 – 30/05
ASE free float shares’ price index ended the week at (2017.5)
points, compared to (2025.9) points for the last week,
posting a decrease of 0.42%. The total trading volume
during the week reached JD(39.3) million compared to
JD(43.5) million during the last week. Trading a total of
(49.6) million shares through (20,191) transactions
The shares of (177) companies were traded, the shares
prices of (64) companies rose, and the shares prices of (72)
declined.
Top 5 losers for the last week
Top 5 gainers for the last week
Stock
% chg
Stock
% chg
The Investors And Eastern Arab For Industrial And Real Estate
Investments
(14.29%)
Middle East Specialized Cables Company/mesc_jordan Plc
(13.33%)
20.69%
Hayat Pharmaceutical Industries Co.
(12.71%)
The Real Estate & Investment Portfolio Co.
15.38%
Jordan French Insurance
(12.50%)
Shira Real Estate Development & Investments
11.76%
International Ceramic Industries
(10.00%)
Middle East Diversified Investment
333.36%
Arab Union International Insurance
21.21%
Al-ekbal Printing And Packaging
34
Local Debt Monitor
Latest T-Bills

As of June 2, the volume of excess reserves, including the overnight window deposits held at the CBJ
JD(2,406) 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
23/07/2012
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 (%)
04/2013
15/04/2013
15/04/2014
75
5.345%
03/2013
26/02/2013
26/02/2014
70
6.750%
02/2013
14/02/2013
14/02/2014
50
6.750%
01/2013
27/01/2013
27/01/2014
70
6.750%
35
Local Debt Monitor
Latest T-Bonds Issues
2 years T-Bonds
Issue Date
Maturity Date
Size - million
Coupon (%)
T2613
28/04/2013
28/04/2015
50
6.039%
T2213
10/04/2013
10/04/2015
75
6.604%
T2113
08/04/2013
08/04/2015
50
6.788%
3 years T-Bonds
Issue Date
Maturity Date
Size - million
Coupon (%)
T3213
29/05/2013
29/05/2016
50
6.530%
T3113
26/05/2013
26/05/2016
50
6.498%
T3013
20/05/2013
20/05/2016
50
6.515%
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 (%)
T3313
02/06/2013
02/06/2018
50
7.484%
T2813
08/05/2013
08/05/2018
50
7.474%
Public Utility Bonds
Issue Date
Maturity Date
Size - million
Coupon (%)
PB56 (Water Authority)
12/05/2013
12/05/2016
30
6.662%
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%
36
Prime Lending Rates
37
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38