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U.S. consumer confidence drops sharply in September


Financial Markets

Oil prices extended their weekly decline on Friday after Wall Street’s most influential voice in oil trading,
Goldman Sachs Group Inc., cut its price forecasts, citing a global supply glut and concerns about
China’s economy. Brent, the global benchmark, fell 2.6 percent (or $1.27) to $47.62 a barrel, extending
its weekly decline to 3.9 percent, while West Texas Intermediate (WTI), the U.S. benchmark, lost 3.2
percent (or $1.48) to $44.44 a barrel, down 3.4 percent this week.

U.S. Treasuries advanced after a poor reading on consumer sentiment boosted investor demand for
safe-have assets. The yield on the 10-year benchmark Treasury note fell 4 basis points (bps) to 2.18
percent, and the 2-year note yield slid 2 bps to 0.72 percent. Although yields on Treasuries are moving
lower Friday, they are still higher than a week ago as traders are awaiting Federal Reserve’s decision on
interest rate.



High Income Economies

U.S. consumer confidence slipped much more than anticipated in September. The consumer sentiment
index produced by the University of Michigan fell from 91.9 in August to 85.7 in September, the lowest in
a year. While consumer spending remains strong, there are growing concerns about volatility in equity
markets, ahead of a possible interest rate hike.

The Central Bank of Russia left policy interest rates unchanged at 11 percent. Since the emergency
hike to 17 percent in December 2014 to protect the ruble, the authorities have been progressively
lowering rates. While the economy registered a sharp contraction in Q2, the ruble is under pressure and
inflation is high, limiting the scope for further cuts in policy rates.

August consumer price inflation in Germany was 0.2 percent (y/y) in August, and zero (m/m), meeting
expectations and helping lift the euro against major currencies.



Developing Economies

East Asia and Pacific

Malaysia's central bank, Bank Negara, left its key overnight policy rate unchanged at 3.25 percent as
expected by economists. The bank said the current stance of monetary policy remains accommodative
and supportive of economic activity.

Latin American and the Caribbean

Consumer prices in Brazil increased 9.53 percent (y/y) in August, slowing slightly from a 9.56 percent
rise in July. The monthly inflation rate eased for the second straight month to 0.22 percent, the lowest
since July 2014.

South Asia

On strong increases in manufacturing and electricity output, India's industrial production rose 4.2 percent
in July (y/y), higher than the economists’ expected increase of 3.6 percent. The growth rate for June
was revised to 4.4 percent from 3.8 percent.

Sub-Saharan Africa

According to the IMF, Kenya’s shilling will probably remain under pressure as capital inflows slow. The
shilling has fallen 14 percent against the dollar this year as earnings from tourism and agriculture
slumped and investors offloaded riskier, emerging-market assets in anticipation of a U.S. interest-rate
increase

September 11, 2015




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