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                      DECPG Daily
        Economics and Financial Market Commentary
                    January 10, 2014
                            Derek Chen, Gerard Kambou, Eung Ju Kim


  You’ll find recent issues of this Daily and lots of other current analysis and high -frequency data at our
                                    website: http://www.worldbank.org/gem

U.S. Treasuries rally on slow job growth…China’s export growth slows in
December


Financial Markets…US. Treasuries prices rallied while the dollar pared gains on Friday
as much weaker-than-expected U.S. job growth in December curbed speculations the
Federal will accelerate the pace of its tapering plan. The benchmark 10-year yield
tightened 9 basis points (bps) to a two-week low of 2.88% in morning session, and the
thirty-year yield dropped 6 bps to 3.82%. The 10-year yield jumped to 3.05% on January
2, maintaining the momentum following the Fed ’s tapering decision last month, which
was the highest level since July 2011. The U.S. currency weakened 0.7% against the
yen, and its fell 0.5% versus the euro to 1.3672.
Mexico sold $4 billion in long-term sovereign global bonds yesterday, becoming the
fourth developing-country government to tap the international bond market this week.
The Mexican government issued $1 billion in 7-year bonds to yield 120 basis points
(bps) over comparable U.S. Treasuries and $3 billion in 30-year bonds to yield 170 bps
higher than Treasuries. Developing-country sovereign bond sales have been on a
record pace this month, with Sri Lanka, Indonesia, the Philippines, and Mexico raising
$10.5 billion combined this week. Furthermore, overall developing-country bond sales
(including both corporate and sovereign issues) since the start of the year more than
doubled from year-ago levels.

Developing Economies…East Asia and Pacific: China’s export growth slowed
markedly in December, advancing 4.3% (y/y) compared with November ’s growth of
12.7%. Meanwhile imports accelerated to an annual growth of 8.3%, faster than
November’s 5.3% increase. As a result, the trade surplus shrank to US$25.6bn in
December, down from US$33.8bn in November. For the full year of 2013, exports grew
7.9%, imports rose 7.3%, and the trade surplus amounted to US$259.75bn.

Europe and Central Asia: Bulgaria’s industrial production increased for the third
consecutive month in November, rising by a working-day adjusted 2.8% (y/y), after a
gain of 3.6% in October. Contributing to the November gain, manufacturing production
increased 4.7% (y/y) and mining and quarrying rose 28.4% (y/y); while production of
electricity, gas, steam and air conditioning fell 11.4% (y/y).

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Latin America and the Caribbean: Brazil’s annual headline inflation, measured by the
consumer price index, accelerated in December, rising to 5.91% from 5.77% in
November, approaching the government’s target ceiling of 6.5% for 2014. Contributing
to this increase, prices of food and beverages rose 8.48% (y/y), housing costs
increased 3.4% (y/y), prices of clothing and footwear climbed 5.38% (y/y) and
transportation cost rose 3.29% (y/y). Month-on-month, prices rose 0.92% in December,
faster than the 0.54% increase recorded in November.

South Asia: India’s industrial production continued to decline in November, falling 2.1%
y/y) after decreasing 1.8% (y/y) in October. Driving the November decline,
manufacturing output fell 3.5% (y/y), partially offset by a 1% (y/y) increase in mining
production. Electricity production rose 6.3% (y/y).

Separately India’s exports rose 3.49% (y/y) in December, less than the consensus
forecast of a 7% gain. Meanwhile, imports fell 15.25% (y/y), slightly more than the
expected 15% decline. As a result, the trade deficit fell to US$10.1bn (y/y) in December
from US$17.59bn a year ago.

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