BIS Quarterly Review, June 2012
This may in part reflect large bond purchases by Italian and Spanish banks inboth primary and secondary markets following the ECB’s LTRO. Spanish andItalian sovereign credit spreads also fell as investor fears subsided (Graph 2,centre panel). The more positive view was similarly reflected in the slope of thecredit risk curve, which became less flat (Graph 2, right-hand panel). Theimprovement was particularly strong for Italy, with the Italian credit curveregaining its positive slope after having been inverted during the last two tothree months of 2011.
Improved global economic outlook
As euro area strains eased, market participants focused on the global growthoutlook. Positive news about the US economic recovery led market participants
Global growth outlook and patterns
2012 growth forecasts
Emerging market economies
Purchasing managers’ indices
United Euro Asia- Latin EmergingStates area Pacific
Nov 2011Feb 2012May 2012
–10 –505102009 2010 2011 2012 2013Latin America
Other emerging Asia
Central and easternEurope
20304050602009 2010 2011 2012United StatesEuro areaEmerging markets ex China
Consensus forecasts, in per cent.
Annual changes in real GDP, in per cent. Actual (quarterly) data up to2011. Forecasts for full-year 2012 and 2013 growth are shown as dots.
For regions, weighted averages based on 2005 GDP and PPPexchange rates.
Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela.
Hong Kong SAR, India, Indonesia, Korea,Malaysia, the Philippines, Singapore and Thailand.
The Czech Republic, Hungary, Poland, Russia and Turkey.
Levels above(below) 50 indicate an expansion (contraction).
Hong Kong SAR, Hungary, India, Mexico, Russia, Singapore, South Africa andTurkey.Sources: Bloomberg; © Consensus Economics; national data; BIS calculations. Graph 3
Euro area sovereign bonds and CDS
Credit curve steepness
–100 –500501002011 2012
Five-year government bond yields, in per cent.
Five-year CDS, in basis points.
Difference between 10-year CDS and two-year CDS spread, in basis points.Sources: Bloomberg; Markit; BIS calculations. Graph 2