By EM Bits
- November Philippine overseas remittances were the lowest since January 2009
- Bonds in India continue their downtrend
- National Bank of Poland meets and is expected to keep rates steady at 2.0%
November Philippine overseas remittances were the lowest since January 2009. Remittances are estimated to account for around 10% of domestic consumption, so it’s not a trivial matter. Some of the decline could be coming from the Gulf oil producing states, where many Philippine migrants work. This represents a considerable downside risk for country. The remittances rose 2.0% y/y in November (at $2.1bln), well below expectations at 6.4% y/y and 7.0% y/y in October. Philippine central bank deputy governor Guinigundo opined that this slowdown would be temporary, but if continues it would be a “source of uncertainty.”
Bonds in India continue their downtrend. The move today was helped by wholesale inflation figures for December, which came out on the low side at 0.11% m/m for, or 5.2% y/y. Fuel and power prices came down 7.8% y/y. A lot is going right for India at the moment. Aside from the commodity price decline, Modi progress on the fiscal and structural reforms has been gradual, but encouraging. Prospects of lower rates this year has helped underpin a 75 bp decline in India’s 10-year yields, now at 7.78%, the lowest level since mid-2013. We see room for gains to continue.
National Bank of Poland meets and is expected to keep rates steady at 2.0%. Poland then reports December CPI Thursday, expected at -0.9% y/y vs. -0.6% in November. Given deepening deflation risks, we think there is a risk of a dovish surprise. If not, we do think the central bank will eventually resume cutting rates in H1 2015.
Courtesy of EM Bits
ETFs: EPHE, EPOL, PLND, EPI, INDY, INDA
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