Transcript Local Debt Monitor

Interest Rate Monitor
June 16, 2013
Brief Overview
International
US: Yields dropped as traders said bets that Fed
would slow stimulus as soon as its next meeting
were overblown
Eurozone: Growing uncertainty over global monetary
policy trends prompted extreme volatility
Japan: Yen rallies as investors reassess BOJ’s monetary
policies
Markets overview
Major Indices: US stocks rebounded Friday on
speculation that the Fed might not scale back QE
Commodities and Currencies: Brent oil touched a 2M
high over worries political unrest could disrupt
supplies from the Middle East
Central Bank Meeting Calendar
MENA Region
Egypt: Annual urban inflation grows to 8.2%
in May
GCC News Highlights
GCC interbank rates
Comparative MENA Markets
Local Economy
New and analysis
 Inflation registers 7.0% in the first five
months of the year
Markets overview
 Amman Stock Exchange
Interest Rate Forecast
 Local Debt Monitor
The Week Ahead
 Prime Lending Rates
2
International
3
Ten-year yields dropped this week as traders said bets that Fed
would slow stimulus as soon as its next meeting were overblown
•
Treasuries rose, breaking the longest streak of weekly losses
since 2009, amid skepticism the Federal Reserve is about to
slow its bond-buying program designed to hold down
borrowing costs and spur the economy.
•
Ten-year note yields dropped for the first week since April after
reaching a 14-month high as investors weighed whether the
economy is strengthening enough for policy makers to consider
reducing their quantitative-easing stimulus, with more
•
U.S. 10-year yields fell four basis points to 2.13% this week.
The benchmark yield climbed to 2.29% on June 11, the highest
since April 2012, after reaching a 2013 low of 1.61% May 1.
As of June 14
1 Month
3 Months
6 Months
2 Years
5 Years
10 Years
30 Years
0.04%
0.05%
0.08%
0.27%
1.03%
2.13%
3.30%
1 Week Ago A Month Ago
0.04%
0.05%
0.08%
0.30%
1.08%
2.15%
3.31%
0.02%
0.04%
0.08%
0.24%
0.83%
1.95%
3.17%
4
Expectations of Fed Tapering continue to rattle markets
•
The world's financial markets are obsessed with just two things right now: the potential
beginning of the end of the Federal Reserve's bond purchases and what Japan's
currency is doing.
•
Ever since Federal Reserve Chairman Ben Bernanke noted last month that the central
bank may start slowing its stimulus program in just a "few meetings," it's been a
bumpy ride for financial markets.
•
Stocks have had some wild swings and the benchmark 10-year Treasury yield has ticked
slightly higher. Much of the volatility is due to confusion about what exactly Bernanke
meant by a "few."
•
Other Fed officials have since discussed the issue further but have hardly cleared it up.
Economists and strategists thought the slowdown process would begin at either the
September or October meetings.
•
The central bank's stimulus program, known as quantitative easing, currently entails
purchasing $45 billion in Treasuries and $40 billion of mortgage-backed securities each
month. The goal is to lower long-term interest rates, thereby making it cheaper for
consumers and businesses to borrow money.
•
Bernanke and the policy-setting Federal Open Market Committee meet June 18-19, with
expectations of some further clarifications on Wednesday.
5
IMF Sees Fed QE Through 2013, Warns of Exit Plan
Challenges
•
The Fed has said it's looking for "substantial improvement" in the job market before it starts to wind
down stimulus. But what does "substantial" mean? That's anyone's guess. The Fed has yet to lay out
any specific goalposts for QE3.
•
What's also unclear is just how gradually the Fed will curtail the program. Will it start winding down in
$5 billion increments? $10 billion? $20 billion?
•
The QE program is unlikely to come to a full stop until mid-2014, and actual tightening -- when the
Fed starts to sell assets and raise short-term interest rates -- is not expected until mid-2015. (The Fed
has specifically said that it thinks rates should remain "exceptionally low" as long as the
unemployment rate is above 6.5%.)
•
Moreover, in its annual report published Friday, the International Monetary Fund sees the Federal
Reserve maintaining large monthly bond purchases until at least the end of this year and urged the
central bank to carefully manage its exit plan to avoid disrupting financial markets.
•
Unwinding QE “could have adverse global implications, including a reversal of capital flows to
emerging markets and higher international financial market volatility,” the staff said in the report.
•
Concern is already showing, with almost $3 trillion that has been erased from the value of global
equities since Fed Chairman Ben S. Bernanke said May 22 the central bank could scale back stimulus
efforts should the job market outlook show “sustainable improvement.”
6
IMF lowers its growth forecast and warns about federal
budget cuts
•
The IMF lowered its 2014 growth outlook Friday and urged the US to repeal the
huge federal budget cuts introduced this year, denouncing them as "excessively
rapid and ill-designed".
•
It said the deficit reduction programme would be a drag on growth this year.
•
In its annual assessment of the U.S. economy, the fund kept its forecast for a slight
cooling of growth this year to 1.9%, from 2.2% last year. But it cut its estimate for
2014 growth by 0.3 percentage points to 2.7% because of the automatic budget
cuts that have crimped output.
•
The IMF pointed out that growth this year could be as much as 1.75 percentage
points higher without the rapid tightening of fiscal policy.
•
Nevertheless, the IMF said the U.S. recovery is gaining ground and becoming more
durable despite the headwinds created by federal budget battles. House prices
and construction activity is rebounding, household balance sheets are
strengthening and labor market conditions are improving, the fund said.
•
Still, Ms. Lagarde said the Fed should keep the monetary spigot open as “the
economy has a way to go before it returns to full strength.”
•
She said the fund’s growth forecast assumes a “very slight decline” in the Fed’s
bond-buying next year and that Congress agrees to more gradual near-term
budget cuts than the current belt-tightening.
7
U.S. retail sales jump
•
U.S. consumers demonstrated a renewed willingness to consume in May,
easing worries about a slowing economy heading into the summer.
•
Overall retail sales increased 0.6% last month, putting them 4.3% higher
over the past year, the Commerce Department said Thursday. The strong
gain after two sluggish months returned consumer spending to a pace that
has helped power much of the four-year-old recovery.
•
The resurgence in home values and rising stock prices have boosted
consumer spirits and catalyzed spending. Consumers also are getting a boost
from lower fuel costs. Gasoline prices rose slightly in May, but remain well
below the nearly $4 per gallon reached last year.
•
Households' propensity to keep spending suggests the economy should
strengthen later in 2013 after powering through strong headwinds.
Consumer spending, which accounts for more than two-thirds of total
demand in the U.S., was the overwhelming driver of growth early this year.
•
Many economic forecasters feared that January's increase in payroll taxes
would constrain consumers and hit the brakes on the recovery. That didn't
happen.
•
Overall economic growth is expected to remain moderate in the coming
months as across-the-board government spending cuts, which started in
March, filter through the economy.
8
U.S. industrial production struggles
•
U.S. industrial production held flat in May, the latest in a series of data
indicating the country's factories are struggling.
•
Industrial output was unchanged on a seasonally adjusted basis last
month, while capacity utilization edged down to 77.6% from a revised
77.7% in April, the Federal Reserve said Friday. Both results were below
expectations.
•
The report showed U.S. manufacturing output, a component of the
overall industrial figure, increased just 0.1% in May after declining the
two previous months.
•
The manufacturing sector has been stumbling of late after being an
important driver at the start of the four-year-old economic recovery.
Manufacturing employment has declined for three consecutive months,
according to Labor Department data. Meanwhile, a survey from the
Institute for Supply Management showed the sector contracted in May.
•
Within manufacturing, the biggest output decline came in defense and
space equipment, which fell 0.7% in May—the fifth consecutive month
the category failed to record a gain. The pullback likely reflects the acrossthe-board federal spending cuts that began in March and shows that the
effects of the sequester are spilling over to other sectors of the economy.
9
U.S. sentiment below expectations
•
U.S. consumers pulled back slightly on their feelings about the
economy, according to data released Friday.
•
The Thomson Reuters/University of Michigan early-June
consumer sentiment index declined to 82.7 from 84.5 at the end
of May and the preliminary-May index of 83.7, according to an
economist who has seen the numbers. The index was as low as
76.4 at the end of April.
•
Economists expected the preliminary-June index to increase to
84.0.
•
The current conditions index for early June fell to 92.1 from the
final-May reading of 98.0, while the expectations index rose to
76.7 from 75.8.
•
Inflation expectations remain muted, according to the Michigan
report. The one-year inflation expectations reading for early June
edged up to 3.2% from 3.1% at the end of May. Inflation
expectations covering the next five to 10 years rose to 3% from
2.9%.
10
Growing uncertainty over global monetary policy trends
prompted extreme volatility
•
Government bonds have recently taken a hit around
the world, now that investors are preparing for the
possible end of central banks' boundless economic
stimulus.
•
That suggests that the bonds of Spain, Italy, Portugal
and Greece might be susceptible to bigger swings in
the future, as the flood of cash that has poured into
financial markets recedes, leaving their economic
problems more exposed, market participants say.
•
Thanks to the European Central Bank's pledge to
support markets—and to the ocean of cash from
central banks—those bonds saw extraordinary rallies
for the better part of a year. But in recent weeks, the
course has shifted somewhat.
•
Adding to the volatility last week, was the two days of
legal scrutiny of the ECB’s bond-buying plan known as
Outright Monetary Transactions (OMT) – its plan to
save the euro – by Germany’s constitutional court.
11
Uncertainty boosts demand for “safe haven”
•
Moreover, the ECB’s as-yet-unused program to the buy the bonds of the region’s
most indebted nations, OMT, will only target yields that are out of line with
fundamentals, Draghi said in an interview on German ZDF television on June 11.
This pushed yields of the weakest eurozone countries up.
•
Italy’s 10-year yield rose 9bp this week to 4.28% after climbing to 4.47% on June
11, the highest level since April 5. Italy’s economy shrank 0.6% from the previous
three months, more than the 0.5% first reported on May 15, the Rome-based
National Statistics Institute said on June 10.
•
Spain’s 10-year yields rose 4bps to 4.59%, much higher than the 4% it reached
early in May. The spread—or the amount of additional yield investors demand,
above that paid by benchmark Germany—also has risen for both countries over
the period.
•
German bunds rose as speculation central banks will remove stimulus pushed
down stocks and boosted demand for the region’s safest securities.
•
German and French bonds advanced this week as stocks slid around the world on
concern a withdrawal of Fed stimulus will curtail global growth, boosting demand
for the regions safest securities. The German 10-year yield fell 4bp this week to
1.52% and France’s declined 4bp also to 2.09%.
12
Eurozone industrial output shows surprise rise in April
•
Industrial production in the eurozone rose for the third straight month in
April, an indication that the currency area's longest postwar economic
contraction may be coming to an end.
•
It does not get much attention amid volatility in the markets but this is
actually quite positive news. It seems that the easing of austerity and
lower financial stress compared to last year is feeding through to the
economy.
•
The European Union's statistics agency Wednesday said industrial
production in the 17 countries that share the euro rose by 0.4% from
March, but was down 0.6% from April 2012.
•
The bloc's economy remains crippled by the impact of the sovereign debt
crisis as governments continue growth-slowing fiscal consolidation,
millions of Europeans are out of jobs and small- and medium-sized
companies are struggling to get credit.
•
While April industrial production data are relatively encouraging, the
eurozone manufacturing sector is not yet out of the woods.
•
The increase in output was concentrated in Germany and France—the
currency area's largest members—while output fell in a number of
countries that have been hit hardest by the eurozone's fiscal and banking
crisis, including Italy, Spain, Greece and Portugal.
13
Market volatility continues as the Yen rallies, as doubts
surface about Japan’s commitment to stimulus
•
The yen rallied the most since July 2009 amid the highest volatility in a year as investors reassess
the Bank of Japan’s monetary stimulus measures that pushed the currency to a four-year low last
month.
•
Japan’s currency gained against all its most-traded peers as BOJ Governor Haruhiko Kuroda held
back from extending the maturity of loans to banks as part of its unprecedented easing program.
•
Markets might be questioning whether the BOJ is willing to continue to be aggressive on
increasing accommodation.
•
The yen strengthened 3.3% this week to 94.31 per dollar and touched the strongest level since
April 4. It reached 103.74 on May 22, the weakest since Oct. 3, 2008.
•
Japanese markets have gyrated since the currency initially weakened when Kuroda on April 4
outstripped economist forecasts by pledging to double monthly bond purchases.
•
The yield on Japan’s benchmark 10-year bond fell for a second week to 0.82%. It has swung from
an all-time low of 0.315% to as much as 1% since April 4. The Nikkei 225 Stock Average dropped
into a bear market on June 13 as all shares on the gauge fell for the second time this year.
•
The BOJ this week kept unchanged its plan for a 60 trillion-yen ($640 billion) to 70 trillion-yen
annual increase in monetary base, the central bank said after a two-day meeting ended today.
14
Bank of Japan stands pat
•
The Bank of Japan refrained Tuesday from taking any new
measures to stimulate growth and ease market volatility,
citing signs of economic recovery, but disappointing investors
who expected further action to address problems in the
government bond market.
•
The bank's mammoth bond-purchasing program has
prompted sharp swings in the government-bond market, and
some investors expected the bank to try to address that by
expanding a bank loan program.
•
The BOJ offered a relatively upbeat projection for Japan's
prospects, a day after the government upgraded its own
assessment for growth in the first quarter, saying Japan's GDP
expanded at 4.1% annual pace, the fastest among the
advanced economies. The bank on Tuesday cited
improvements in exports, resilience in business investment
and private consumption and noted rising industrial
production.
•
The BOJ decided unanimously to maintain its key policy of
boosting the monetary base by ¥60 trillion to ¥70 trillion
annually as it seeks to create annual inflation rates of around
2% to pull the economy out of its long-running deflationary
pressures.
15
Is recent volatility a judgment on “Abenomics” or simply an
adjustment period
•
Meanwhile, the government used the formal release of its 10-year growth plan
Friday, a day after Japanese stocks fell into bear territory, to try to reassure
nervous investors that its economic policies will work—and to promise more to
come.
•
With just a month to go until elections for Japan's upper house of parliament,
Japanese voters point to the economy as their main concern. But Prime Minister
Shinzo Abe has been unable to convince people—and markets—that his growth
strategy has substance.
•
He reiterated past promises, including one to raise per capita income by ¥1.5
million ($15,760) in 10 years, and promised more to come later in the year.
•
When Mr. Abe unveiled details of his growth strategy last week, the Nikkei Stock
Average fell 3.8%, with market watchers focusing on what wasn't being said: no
corporate tax cuts, no labor deregulation to ease layoffs, no farm subsidy
overhaul.
•
While Mr. Abe might look for positives in the 1.9% rebound in Tokyo stocks
following Friday's announcement, the index was down for the fourth straight
week. The Nikkei remains up 22% on year, but is 19% off its mid-May peak.
16
US stocks rebounded Friday on speculation that the Fed might not
scale back QE as fast as has been speculated recently
17
Brent oil touched a two-month high over worries that an escalation
to the conflict in Syria could disrupt supplies from the Middle East
18
Major Interest Rate Forecasts
Market yield
(June 14)
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
US 10-year
2.13
2.07
2.18
2.37
2.56
2.69
2.81
Fed Fund Target Rate
0.25
0.25
0.25
0.25
0.25
0.25
0.25
1.51
1.44
1.54
1.69
1.87
1.98
2.15
0.50
0.50
0.50
0.38
0.38
0.50
0.50
2.06
0.50
2.00
0.50
2.10
0.50
2.21
0.50
2.41
0.50
2.46
0.50
2.52
0.50
Rate (%)
United States
Germany
Germnay 10-year
ECB Main Refinancing Rate
United Kingdom
UK 10-year
BoE Bank Rate
Source: Bloomberg
19
The Week Ahead,,,
Economic Data Release Calendar
June 16, 2013 - June 21, 2013
Date
17-Jun Mon
18-Jun Tue
19-Jun Wed
20-Jun Thu
21-Jun Fri
Currency Event
EUR
USD
CNY
AUD
JPY
GBP
GBP
EUR
EUR
USD
USD
USD
JPY
JPY
USD
GBP
EUR
USD
USD
USD
NZD
CNY
CHF
EUR
EUR
EUR
EUR
EUR
GBP
USD
USD
EUR
USD
JPY
EUR
EUR Euro-Zone Trade Balance s.a. (euros)
USD NAHB Housing Market Index
CNY China May Property Prices
AUD RBA Policy Meeting - June Minutes
JPY Industrial Production (YoY)
GBP Core Consumer Price Index (YoY)
GBP Consumer Price Index (YoY)
EUR Euro-Zone ZEW Survey (Economic Sentiment)
EUR German ZEW Survey (Economic Sentiment)
USD Consumer Price Index (YoY)
USD Consumer Price Index Ex Food & Energy (YoY)
USD Housing Starts (MoM)
JPY Adjusted Merchandise Trade Balance (Yen)
JPY Merchandise Trade Exports (YoY)
USD Federal Reserve FOMC Meeting
GBP Bank of England Minutes
EUR Euro-Zone Construction Output w.d.a. (YoY)
USD Federal Open Market Committee Rate Decision
USD Fed Releases Summary of Economic Projections
USD Fed's Bernanke Holds Press Conference in Washington
NZD Gross Domestic Product (YoY)
CNY HSBC Flash Manufacturing PMI
CHF Swiss National Bank Rate Decision
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 Initial Jobless Claims
USD Markit US PMI Preliminary
EUR Euro-Zone Consumer Confidence
USD Existing Home Sales (MoM)
JPY BOJ Governor Kuroda Speaks at NASB
EUR Euro-Zone Current Account s.a. (euros)
GMT
09:00
14:00
01:30
01:30
04:30
08:30
08:30
09:00
09:00
12:30
12:30
12:30
23:50
23:50
08:30
09:00
18:00
18:00
18:30
22:45
01:45
07:30
07:30
07:30
08:00
08:00
08:00
08:30
12:30
12:58
14:00
14:00
06:35
08:00
Forecast
Previous
45.00
18.7B
44.00
38.10
1.40%
1.70%
11.40%
-¥892.8B
6.40
-2.30%
2.00%
2.40%
27.60
36.40
1.10%
1.70%
-16.50%
-¥764.4B
3.80
0.25%
-7.90%
0.25%
2.10%
2.60%
2.40%
49.40
0.00%
49.90
50.00
48.60
47.50
48.10
0.50%
340K
52.50
-21.50
0.60%
3.00%
49.20
0.00%
49.40
49.70
48.30
47.20
47.70
0.20%
334K
-21.90
0.60%
25.9B
20
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)
July 4
0.50%
0.50%
Bank of England (BoE)
July 4
0.50%
0.50%
Bank of Japan (BOJ)
July 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)
July 2
2.75%
2.75%
Reserve Bank of New Zealand (RBNZ)
July 24
2.50%
2.50%
21
Regional
22
Egypt’s annual urban inflation grows to 8.2% in May
•
Egypt’s annual urban inflation rose to 8.2% in May, with the rise
mainly attributed to increase in the prices of gas, electricity and
transportation.
•
However, the rate of urban inflation declined by 0.2% in May
compared to April 2013.
•
Cost of transportation went up by 3.4% while electricity and
natural gas rose by 16.2% and 105.7% respectively. Vegetable
prices also increased by 5.6%.
Source: Trading Economics
•
Analysts are attributing the high rate of inflation to Egypt’s
depreciating pound, which has depreciated by 9.72% since the
beginning of the year.
•
Additionally, Egypt’s government has recently moved to reduce
subsidies on electricity and natural gas, which account for
approximately 5% of the country’s current subsidy bill.
•
Egypt’s annual rural inflation grew to 10% in May 2013, while
annual core inflation increased to 8.04% in May from 7.47% in
April.
Source: Bloomberg
23
Egypt in final stages of IMF loan – central bank governor
•
Egypt’s treasury yields rose slightly this week as the inflation rate
grew to 8.2% in May, however they remain reasonably lower than
pervious weeks.
•
In other news, Egypt's government is in the late stages of verifying its
economic reform program with the International Monetary Fund
before obtaining a $4.8 billion IMF loan, its central bank governor
said on Saturday.
•
The loan is needed to help stabilize Egypt's balance of payments and
state finances, and has been under discussion for two years but
agreement has repeatedly been postponed by political unrest in the
country and the government's reluctance to commit to austerity
measures.
•
"The IMF is verifying numbers with the government regarding the
program and they are in late stages of verifying all the numbers,"
according to central bank governor Hisham Ramez.
•
The IMF expects Egypt's budget deficit to widen to 11.3% of gross
domestic product in the fiscal year which ends in June, the largest
gap since 2002, from 10.7% in the previous year.
•
Egypt's central bank foreign currency reserves stand at $16 billion,
rising for the second consecutive month.
Source: Bloomberg
24
GCC Economic Highlights:
Saudi May inflation slows to 3.8% on year as core index dips
•
According to the Kingdom’s Central Department for Statistic and
Information, Saudi Arabia's annual inflation rate slowed slightly to 3.8%
in May, the lowest this year, from 4% in April due to a fall in the core
index.
•
The main contributor to the overall easing of inflation rates was a fall in
the core index--which excludes food and housing components--to 2.6%
in May from 3.4% in April.
•
Meanwhile, food and beverages prices edged up to 6.4% in May versus
6.2% in April, while rental and housing prices rose to 3.6% from 3.0%.
•
All of the core index's main components--clothing and footwear,
transport, and restaurants and hotels--showed a significant drop in
May.
•
Saudi's central bank and the International Monetary Fund both expect
inflation in the oil-rich Arab gulf kingdom to peak at around 4.6% this
year before slowing again by 2014.
•
In other news, Standard & Poor's Ratings Services said yesterday it
revised to positive from stable its outlooks on Saudi Arabia-based Arab
National Bank, Banque Saudi Fransi, and the Saudi British Bank. At the
same time, it said, it affirmed its long- and short-term counterparty
credit ratings on all three banks at "A/A-1".
25
GCC Economic Highlights:
Qatar’s annual inflation rate hits 3.5%
•
Qatar’s consumer price index rose 3.5% year-on-year and the index was
slightly up by 0.1% month-on-month in May 2013, figures released by
the Qatar Statistics Authority revealed.
•
The CPI data issued for the month of May recorded increase in all the
groups except ‘miscellaneous goods & services, where prices declined
by 1.3%.
•
The y-o-y inflation was mainly driven by ‘entertainment, recreation and
culture’ group, which grew by 7.0% and ‘rent, fuel and energy’ by 6.5%.
•
Additionally, ‘transport and communications grew 2.7%, while food,
beverages and tobacco grew by 2.4%.
•
On the other hand, the CPI data recorded a month-on-month increased
in two major groups.
•
Food, beverages and tobacco grew by 0.2%, while garments and
footwear became costlier by 0.2%.
•
On the other hand, prices declined by 1.3% in ‘miscellaneous goods and
services’, and by 0.1% in ‘furniture, textiles and home appliances’.
26
GCC interbank rates
Source: Bloomberg
27
Comparative MENA Markets
For the period 09/06 – 14/06
28
Locally
29
Inflation registers 7.0% in the first five months of the year
•
The inflation rate reached 7.0% during the first five months
of 2013 compared to the same period last year.
•
Even though this is a high level of inflation, it is still lower
than previous months. This lower inflation level compared to
previous months in 2013 can be attributed to lower food
prices and partially lower consumption levels for the same
period.
•
Among the main commodities groups which contributed to
this increase were:
–
–
–
–
•
•
Transportation (18.50%)
Fuel and Electricity (24.70%)
Meat and Dairy (7.80%)
Fruits and Vegetables (21.50% and 18.70%)
The report also showed that inflation rate for May 2013 has
increased by 7.1% compared with May the previous year.
Among the main commodities groups which contributed to
this increase were:
–
–
–
–
Transportation (18.30%)
Fuel and Electricity (23.00%)
Meat and Dairy (7.00%)
Fruits and Vegetables (39.60% and 19.20%)
Forecast:
Forecasts by international agencies on Bloomberg expect crude
oil prices to rise throughout the 3 quarters of the year.
Jordanian government is expected to increase electricity tariffs
after Ramadan by 15% on businesses and factories.
Study by the IMF show raising electricity tariffs is expected to
cause inflation to increase by 1 to 1.5 percent.
The increasing number of Syrian refugees is placing pressure on
industries, services and infrastructure in Jordan.
Other news has emerged that the Prime Minister is thinking of
lifting subsidies on essential commodities goods such as flour and
bread.
30
Household electricity prices to be raised in 2014
•
Prime Minister Abdullah Ensour told deputies on Tuesday that electricity
prices for household consumption will not be raised until early 2014 and
claim that more than 90% of citizens will be unaffected by the rise.
•
During a meeting with House members, the premier said that the hike will
only apply to house electricity bills that exceed JD50 a month, and the
rise, set at 15%, will only be calculated for the value of consumption
above JD50 and not the entire value of the bill.
•
He said small consumers will not see a rise in their electricity bills "not in
the near, not in the foreseen future".
•
The hike in electricity prices is part of the national economic reform
program set by the IMF to minimize NEPCOs annual financial losses and
arrears.
•
NEPCO’s rapidly growing budget deficit is set to reach JD3.47 billion by
the end of the year and over JD7.5 billion in 2017 according to Minister of
Energy.
•
It is seen as imperative for the government to reduce its fiscal deficit and
minimize the effect of energy shocks on its electricity production.
31
CBJ Government Bonds Portfolio Falls
•
Since beginning of the year, the CBJ has reduced
weekly and monthly repo agreements amounts
by 400 million JD, reducing excess liquidity in the
market.
•
Additionally, the CBJ has cut its holdings of JD
government bonds by around JD 300 Million for
the same period.
•
This means that CBJ has withdrawn monetary
stimulus by about JD 700 Million since the
beginning of year.
•
Despite the pressure caused on JD liquidity due
to these factors, government bonds yields
decreased by 2% for the same period, reflecting
strong De-Dollarization wave and market
expectations of less future demand on domestic
liquidity.
32
Amman Stock Exchange
For the period 09/06 – 13/06
ASE free float shares’ price index ended the week at (2033.4)
points, compared to (2022.5) points for the last week,
posting an increase of 0.54%. The total trading volume
during the week reached JD(43.3) million compared to
JD(56.4) million during the last week. Trading a total of
(41.7) million shares through (20,038) transactions
The shares of (179) companies were traded, the shares
prices of (70) companies rose, and the shares prices of (69)
declined.
Top 5 losers for the last week
Top 5 gainers for the last week
Stock
% chg
Stock
% chg
Alshamekha For Realestate And Financial Investments
27.27%
United Arab Investors
(25.00%)
Middle East Diversified Investment
22.50%
Ubour Logistic Services Plc
(21.01%)
Specialized Trading & Investment
16.33%
Jordan Petroleum Refinery
(16.17%)
El-zay Ready Wear Manufacturing
14.71%
High Performance Real Estate Investments
(14.29%)
Al-eqbal Investment Company Ltd
13.31%
Hayat Pharmaceutical Industries Co.
(14.01%)
33
Local Debt Monitor
Latest T-Bills

As of June 16, the volume of excess reserves, including the overnight window deposits held at the CBJ
JD(2,365) 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%
34
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%
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%
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%
Issue Date
Maturity Date
Size - million
Coupon (%)
T3413
10/06/2013
10/06/2018
50
7.561%
T3313
02/06/2013
02/06/2018
50
7.484%
Issue Date
Maturity Date
Size - million
Coupon (%)
PB58 (Water Authority)
13/06/2013
13/06/2018
12
7.703%
PB57 (Water Authority)
06/06/2013
06/06/2018
15
7.684%
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%
3 years T-Bonds
4 year T-Bonds
5 years T-Bonds
Public Utility Bonds
35
Prime Lending Rates
36
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
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37