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ECONOMICS

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01.15.14 www.bloombergbriefs.com Bloomberg Brief | economics 2013 Global Review 2

Abenomics, stability in the euro zone and a potentially lasting U.S. economic recovery have renewed investors’ eupho-ria in the developed world, albeit at the expense of emerging markets.

Emerging market equities are experi-encing their longest streak of underper-formance against their G-7 counterparts since the mid to late 1990s on an an-nual basis, as measured by their MSCI indexes. The MSCI G-7 equity index finished 2013 up about 25 percent year on year as the MSCI emerging market index fell 5 percent. That’s the largest spread since April 1999.

While Abenomics likely will face long-term challenges in 2014, the first two ar-rows of Japan’s stimulus program — fiscal stimulus and monetary easing — have already been implemented and should continue to contribute to Japanese growth and a weaker yen. In Europe, while many challenges remain, a period of stabil-ity appears likely to persist, with at least modest growth ahead for many euro zone countries in 2014. In the U.S., a period of rapid productivity growth and slow hiring after the financial crisis has likely stretched companies’ current labor forces as far as they can be stretched. Accelerat-ed hiring as growth continues to pick up is the probable result, helping to reinforce a positive feedback loop. In fact, in the U.S., most year-end data came in well above economists’ forecasts {ECSU<GO>}.

U.S. Federal Reserve Chairman Ben Bernanke may have signaled the death knell for many emerging markets on May 22 when he first indicated that Fed taper-ing of its asset purchase program was in the offing. Following this announcement, the U.S. 10-year curve steepened sub-stantially with long-end rates rising. The U.S. 10-year yield, which hit its one-year low of 1.6255 percent on May 2, was just shy of 3 percent immediately prior to the Fed’s September meeting, at which the FOMC unexpectedly delayed its decision to taper.

This period of rising U.S. rates led to a sharp deterioration of international financial conditions. Riskier emerging markets saw substantial capital outflows, especially from countries with high current account deficits that are dependent on foreign capital for growth {WFII<GO>}.

Countries in this category that saw substantial currency depreciation include India, Brazil, Indonesia and Turkey. At the same time, stocks rallied and economic prospects held steady or improved in the developed markets, as measured by Bloomberg’s consensus 2014 real GDP forecasts {ECFC<GO>}.

In contrast, emerging markets stocks sank as growth prospects dwindled. The largest decline occurred in Latin America, where the 2014 GDP growth consensus stood at 2.89 percent as of Jan. 7, down from 4 percent a year earlier. Developed Europe, which experienced the largest improvement, may grow 1.41 percent in 2014, up from 1.33 percent a year ago. Though the U.S.’s 2014 growth forecast

has fallen modestly to 2.6 percent from 2.8 percent at the start of the year, U.S. GDP growth is forecast to accelerate to 3 percent quarter-on-quarter SAAR by the fourth quarter of 2014 from a 2.6 percent forecast for the first quarter. Global growth is anticipated to total 2.85 percent in 2014.

The FOMC’s eventual move on Dec. 18 to begin the process of tapering outlined by Bernanke in May is likely the starting point for a longer-term trend of U.S. inter-est rate normalization. Over the past 20 years, the U.S. 10-year yield has averaged more than 4.5 percent, well above the cur-rent level just south of 3 percent.

While Janet Yellen, who takes over the Fed on Feb. 1, probably will aim to increase rates gradually and without caus-ing trauma to markets, international finan-cial conditions may continue to weaken, weighing on overall emerging market growth. At the same time, developed mar-kets are likely to continue to benefit from strengthening economies.

OvErvIEw Commentary By miChael mCdonough, BloomBerg eConomiSt

recovery in Developed Markets to Dominate in 2014

-1.2

-1.0

-0.8

-0.6

-0.4

-0.2

0.0

0.2

Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14

G10 Europe Asia EMEA LATAM World

Source: Bloomberg

* Bernanke Indicates Tapering

Emerging Market Growth Prospects Dwindling

Follow MICHAEL MCDONOUGH on TwitterFOr rEGULAr UpDATEs AND ADDITIONAL INsIGHTs @m_mcdonough

1 2 3 4 5 6 7 8 9 10 11 12 13 14

01.15.14 www.bloombergbriefs.com Bloomberg Brief | economics 2013 Global Review 3

1460

2-31

2

GR WTHIt’s what the CGMA® designation stands for

Officially, it’s Chartered Global Management Accountant®. Established by AICPA and CIMA, two of the world’s most prestigious accounting

bodies, the CGMA designation represents accomplished professionals who drive and deliver business success, worldwide.

Find out more at cgma.org

1 2 3 4 5 6 7 8 9 10 11 12 13 14

01.15.14 www.bloombergbriefs.com Bloomberg Brief | economics 2013 Global Review 4

2014 CAlENDAr

Jan. 14-15: Egyptians vote on a new constitution

Jan. 22 Syrian warring parties summit set to begin

Feb. 1: Janet Yellen’s first day as Fed chair

Feb. 2: Thai general elections

Feb. 7: The Sochi Olympics will begin

after several terrorist acts

nearby

March: China’s National People’s Congress will set economic priorities for the year, including the budget and growth target

March 19: Yellen’s first post-FOMC meeting press conference

April: South African national elections are due in the next three months

April 5: Afghanistan national elections

Sept. 14 Sweden general elections

Oct. 5: Brazil general elections

November: ECB takes over supervision of euro area’s largest banks

Nov. 15-16: G-20 leaders’ summit

April 9: Indonesia parliamentary elections

Sept. 18 Scotland referendum on independence

Oct. 10-12: IMF/World Bank annual meetings

Nov. 4: U.S. mid-term elections

April 1: Japan raises its consumption tax

May 22-25: European Parliament elections

April 11: IMF spring meeting starts

July: Yellen delivers monetary outlook to Congress

APr.

SEP. Oct. NOv. DEc.

MAr.JAN. FEb.

May 25: Belgian federal elections

June 12: World Cup starts in Brazil

July 9: Indonesia presidential elections

by May 31: India general elections

June 4-5 G-8 leaders in Sochi

June 30: The biggest U.S. banks are scheduled to begin Volcker Rule reporting

End of May: Six months of talks with Iran over nuclear weapons conclude

MAy JuN. July

QuOtE OF 2013

“ If we see continued improvement, and we have confidence that that is going to be sustained, in the next few meetings we could

take a step down in our pace of purchases.”— Ben Bernanke, in May 22 testimony prepared for a hearing at the Joint Economic

Committee of Congress in Washington.

Brazilian President Dilma Rousseff

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01.15.14 www.bloombergbriefs.com Bloomberg Brief | economics 2013 Global Review 5

CONSENSuS fOrECAStS {ECfC <GO>} BloomBerg newS

COuNtrY GrOSS DOMEStIC PrODuCt CONSuMEr PrICE INDEX uNEMPlOYMENt rAtE (%)YoY% unless

Otherwise Specified 2011 2012 2013f 2014f 2015f 2011 2012 2013f 2014f 2015f 2011 2012 2013f 2014f 2015f

G-5 Countries

united states* 1.8% 2.8% 1.7% 2.6% 3.0% 3.1% 2.1% 1.5% 1.7% 2.0% 8.9% 8.1% 7.4% 6.8% 6.2%eurozone 1.5% -0.6% -0.4% 1.0% 1.4% 2.7% 2.5% 1.4% 1.2% 1.5% 10.2% 11.4% 12.1% 12.1% 11.8%Japan* -0.6% 2.0% 1.8% 1.6% 1.2% -0.3% 0.0% 0.3% 2.4% 1.8% 4.6% 4.4% 4.0% 3.9% 3.8%united Kingdom 1.1% 0.2% 1.4% 2.4% 2.4% 4.5% 2.8% 2.6% 2.2% 2.2% 8.0% 8.0% 7.7% 7.3% 7.0%Canada* 2.5% 1.7% 1.7% 2.3% 2.5% 2.9% 1.5% 1.0% 1.5% 1.9% 7.5% 7.3% 7.1% 6.8% 6.6%

euro AreA

Germany 3.4% 0.9% 0.5% 1.7% 1.9% 2.5% 2.1% 1.6% 1.6% 1.9% 6.8% 6.9% 6.9% 6.8% 6.6%France 2.0% 0.0% 0.2% 0.8% 1.3% 2.3% 2.2% 1.0% 1.3% 1.4% 9.6% 10.3% 10.9% 11.0% 10.8%italy 0.4% -2.4% -1.8% 0.5% 0.9% 2.9% 3.3% 1.3% 1.2% 1.4% 8.4% 10.7% 12.2% 12.4% 12.1%spain 0.1% -1.6% -1.3% 0.6% 1.2% 3.1% 2.4% 1.5% 0.8% 1.0% 21.7% 25.0% 26.5% 26.2% 25.5%netherlands 0.9% -1.2% -1.1% 0.4% 1.1% 2.5% 2.8% 2.7% 1.5% 1.5% 5.8% 6.6% 8.4% 9.1% –Greece -7.1% -6.4% -3.9% 0.0% 1.4% 3.3% 1.5% -0.6% -0.4% 0.3% 17.7% 24.2% 27.6% 28.2% 27.8%ireland 2.2% 0.2% 0.0% 1.9% 2.2% 1.2% 1.9% 0.5% 0.7% 1.3% 14.6% 14.7% 13.6% 12.7% 11.9%Portugal -1.3% -3.2% -1.7% 0.5% 1.0% 3.6% 2.8% 0.4% 0.5% 1.0% 12.7% 15.7% 16.6% 16.4% 16.1%

other DeveloPeD euroPe

switzerland 1.8% 1.0% 1.9% 2.1% 2.1% 0.2% -0.7% -0.2% 0.5% 0.9% 2.8% 2.9% 3.2% 3.1% 3.0%sweden 2.9% 1.0% 0.9% 2.4% 2.6% 3.0% 0.9% 0.1% 1.3% 2.0% 7.8% 8.0% 8.1% 7.9% 7.6%norway 1.3% 3.0% 1.9% 2.3% 2.4% 1.3% 0.7% 2.2% 2.0% 2.1% 3.3% 3.2% 3.5% 3.6% 3.9%

eAstern euroPe AnD Cis

russia 4.3% 3.4% 1.5% 2.4% 2.7% 8.4% 5.1% 6.7% 5.4% 5.0% 6.5% 6.0% 5.5% 5.7% 5.6%Poland 4.5% 1.9% 1.4% 2.9% 3.4% 4.3% 3.7% 1.0% 2.0% 2.5% 9.6% 10.1% 13.6% 13.4% 12.8%Czech republic 1.8% -1.2% -1.3% 1.7% 2.5% 1.9% 3.3% 1.4% 1.3% 2.0% 6.7% 7.0% 7.7% 7.4% 7.2%romania 2.2% 0.7% 2.5% 2.5% 3.0% 5.8% 3.3% 4.1% 2.3% 3.2% 5.1% 5.6% 5.3% 5.2% 4.9%hungary 1.6% -1.7% 0.7% 1.8% 2.0% 3.9% 5.7% 1.8% 2.2% 3.0% 10.9% 10.9% 10.5% 10.3% 10.1%ukraine 5.2% 0.2% -1.0% 1.5% 2.5% 8.0% 0.6% -0.3% 3.0% 5.4% 7.9% 7.5% 7.5% 7.3% 7.3%

AFriCA AnD MiDDle eAst

south Africa 3.5% 2.5% 2.0% 2.8% 3.3% 5.0% 5.7% 5.8% 5.6% 5.5% 24.9% 25.1% 25.0% 25.0% 24.6%israel 4.6% 3.4% 3.5% 3.4% 3.5% 3.5% 1.7% 1.6% 1.8% 2.1% 7.1% 6.9% 6.5% 6.8% 6.8%saudi Arabia 8.6% 5.1% 4.0% 4.4% 4.0% 3.7% 2.9% 3.7% 3.5% 3.8% – – 10.0% 9.5% 7.0%

AsiA PACiFiC

China 9.3% 7.7% 7.6% 7.5% 7.2% 5.4% 2.7% 2.7% 3.1% 3.2% 4.1% 4.1% 4.1% 4.1% 4.1%india 6.3% 3.2% 5.0% 4.8% 5.5% 8.4% 10.4% 6.1% 9.2% 8.0% – – – – –south Korea 3.7% 2.0% 2.7% 3.5% 3.6% 4.0% 2.2% 1.2% 2.3% 2.8% 3.4% 3.2% 3.2% 3.2% 3.1%indonesia 6.5% 6.2% 5.7% 5.4% 6.0% 5.4% 4.3% 7.0% 6.5% 5.4% 6.6% 6.1% 6.4% 5.9% 5.8%Australia 2.4% 3.7% 2.4% 2.7% 3.0% 3.3% 1.8% 2.4% 2.6% 2.5% 5.1% 5.2% 5.7% 5.9% 5.8%taiwan 4.1% 1.3% 2.0% 3.5% 3.8% 1.4% 1.9% 1.0% 1.5% 1.6% 4.4% 4.2% 4.2% 4.1% 4.0%thailand 0.1% 6.5% 3.3% 4.5% 4.6% 3.8% 3.0% 2.2% 2.6% 2.7% 0.7% 0.7% 0.8% 0.7% 0.8%

lAtin AMeriCA

Mexico 4.0% 3.6% 1.3% 3.5% 3.9% 3.4% 4.1% 3.7% 3.7% 3.6% 5.2% 5.0% 5.0% 4.9% 4.7%Brazil 2.7% 0.9% 2.3% 2.3% 2.8% 6.6% 5.4% 6.1% 5.8% 5.6% 6.0% 5.5% 5.5% 5.9% 6.0%Argentina 8.9% 1.9% 3.0% 2.3% 2.6% 9.8% 10.0% 10.6% 12.2% 14.9% 7.2% 7.2% 7.5% 7.9% 7.9%Colombia 6.6% 4.0% 4.0% 4.5% 4.7% 3.4% 3.2% 2.2% 2.9% 3.0% 10.8% 10.4% 9.9% 9.6% 9.5%venezuela 4.2% 5.6% 1.3% 0.8% 1.5% 26.1% 21.1% 39.1% 51.2% 45.1% 8.2% 7.8% 7.9% 8.2% 7.9%Chile 5.8% 5.6% 4.3% 4.2% 4.5% 3.3% 3.0% 1.8% 2.8% 3.0% 7.1% 6.4% 6.0% 6.6% 6.8%

Source: Bloomberg As of 12.31.2013 *GDP forecasts are SAAR

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01.15.14 www.bloombergbriefs.com Bloomberg Brief | economics 2013 Global Review 6

We identified the best overall forecasters by using estimates from the Bloomberg ECO survey for key economic indicators in the United States, euro zone and China.

The U.S. ranking was based on 15 indicators: GDP, consumer price index, durable goods orders, existing home sales, housing starts, industrial production, the Institute for Supply Management’s manufacturing index and nonmanufacturing index, new home sales, nonfarm payrolls, personal income, personal spend-ing, producer price index, retail sales and unemploy-ment. We averaged the scores of the 68 forecasters who qualified for a ranking in at least 9 indicators. The ranking shows the top 10 forecasters.

The euro-zone ranking included 11 indicators: GDP, consumer confidence, consumer price index, economic sentiment, industrial confidence, industrial

production, Markit Eurozone Manufacturing PMI, Markit Eurozone Services PMI, M3 money supply, producer price index and unemployment. We aver-aged the scores of the 22 forecasters who qualified for a ranking in at least 7 indicators. The ranking shows the top 20 percent of that group.

The Chinese ranking included 11 indicators: GDP, consumer price index, exports, imports, fixed assets investment, industrial production, money supply, pro-ducer price index, manufacturing PMI, retail sales and international trade balance. We averaged the scores of the 30 forecasters who qualified for a ranking in at least 7 indicators. The ranking shows the top 20 percent of that group.

The latest two years of data reported by Jan. 1 were used. To qualify for a ranking on a monthly indicator, forecasters had to have made estimates for at least 15

of the 24 months and two consecutive forecasts within the last six periods. For quarterly indicators, forecast-ers had to have made at least five calls and two consecutive estimates within the last eight periods. Forecasters who didn’t provide any estimates in the latest three forecasting periods were excluded.

The forecasts and actual reported numbers were compared, and individuals received a score of zero to 100 based on the accuracy of their historical forecasts for each indicator. Economists with fewer forecast errors relative to other forecasters received higher scores. The scores received for each indicator were averaged to determine each forecaster’s rank in a country or region.

bESt OvErAll FOrEcAStErS OF tHE cHINESE EcONOMy Q4 2013

rANk fOrECAStEr fIrM OvErAll SCOrE1 song Yu Goldman sachs 65.332 nie Wen huabao trust 60.503 Yao Wei societe Generale 59.834 Mark Williams Capital economics 57.855 Qu hongbin hsBC 56.976 Chang Jian Barclays 56.28

bESt OvErAll FOrEcAStErS OF tHE EurO-ZONE EcONOMy Q4 2013

rANk fOrECAStEr fIrM OvErAll SCOrE1 Andreas scheuerle/Peter leonhardt DekaBank 65.382 Daniel hartmann Bantleon Bank 65.363 Janet henry hsBC Bank 62.034 Francesca Panelli* Banca Aletti 61.92

*Senior Economist

bESt OvErAll FOrEcAStErS OF tHE u.S. EcONOMy Q4 2013

rANk fOrECAStEr fIrM OvErAll SCOrE

1 Christophe Barraud Market securities 62.192 Bernd Weidensteiner/Christoph Balz Commerzbank 59.283 thomas lam osK-DMG 58.504 Jim o’sullivan high Frequency economics 58.035 nariman Behravesh ihs 57.726 Joshua shapiro Maria Fiorini ramirez 57.487 russell Price Ameriprise Financial 56.688 Michael Feroli JPMorgan Chase 56.509 lou Crandall/Bill Jordan Wrightson iCAP 56.16

10 Brian Wesbury/robert stein First trust Portfolios 56.11

MEtHODOlOGy

bESt OvErAll fOrECAStEr rANkINGS Of 2013

christophe barraud, Market Securities2014 Outlook

“I expect that growth will accelerate in 2014 and reach at least 3 percent, the fastest growth in five years. Federal budgetary policy will be ac-

commodative next year including a 2.4 percent increase in discretionary spend-ing over 2013, which was impacted by a strong reduction (minus 5.3 percent). At the same time, state and local govern-ment spending will no longer be a drag as state finances significantly improved in 2013.

Private investments should be posi-tively oriented. I expect fiscal uncertain-ties will be reduced so companies can increase CAPEX.

The pace of nonfarm payrolls will rise next year, helping boost incomes. Accord-ing to the CBO, the level of mandatory spending (Medicaid, Medicare, Social Se-curity) will be higher and should support households’ budget.

Higher home prices will result in higher expenditures due to the wealth effect and household balance sheets are in much better shape after deleveraging.”

top-ranked u.S. Forecaster

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01.15.14 www.bloombergbriefs.com Bloomberg Brief | economics 2013 Global Review 7

u.S. ECONOMIC OutlOOk Commentary By joSeph BruSuelaS, BloomBerg eConomiSt

Interest rates May Face upward Pressure

The Federal Reserve took a calculated risk by announcing its intention to slow the pace of its asset purchases. While growth this year appears poised to improve, it is unclear if the quality is sufficient to absorb an increase in long-term yields to between 3.25 and 3.5 percent as indicated by the Bloomberg consensus forecast.

The outlook for U.S. growth in 2014 depends to a degree on the actions of politicians and corporations. The easing of federal fiscal restraint would help growth, as would an increase in government spending at the state and local levels.

On the corporate side, whether firms choose to increase spending and invest-ment ahead of any perceived economic acceleration will also be important.

The debt ceiling debate, which will have to be resolved by mid-February, may roil

financial markets and affect consumer and business confidence. A positive reso-lution would probably result in a modest acceleration in overall growth.

Fixed business Investment Key for 2014 Growth

This year will provide an acid test for firms’ confidence in the duration and sustainability of the expansion. Many companies remain reluctant to increase capital expenditures due to weak demand for services. The differ-ence between trend growth and a sustained period of above-trend growth will revolve around the pace of fixed business investment.

Employment conditions: Slow and Steady

Employment conditions may brighten this year if job growth shows contin-ued monthly gains in the 175,000-to-225,000 range. The unemployment rate will probably continue to drift down toward 6.5 percent by the end of 2014. The loss of public sector jobs appears to have ended, with state and local government employment likely to see a modest boost next year.

credit creation Supportive of Nominal GDP

Private credit creation ended the year at a pace well above that of nominal GDP, to which it is highly correlated. This should support an increase in demand for credit, which may signal the end of overall household delever-aging. The key question: Will an increase in credit remain the province of upper income households or will it finally flow down the income ladder?

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2008 2009 2010 2011 2012 2013

Perc

enta

ge

Long Run Asset Purchase Programs U.S. 10-Year Yield

Source: Bloomberg

QE 1 QE 2 Op Twist 1 & 2

QE 3

30

35

40

45

50

55

60

-80

-60

-40

-20

0

20

40

60

2003 2005 2007 2009 2011 2013

Index

Perc

enta

ge

Net % of Dom Resp Reporting Stronger Demand for CRE Loans(LHS) U.S Architecture Firms Work-On-The-Boards Billings Index(RHS)

Source: Bloomberg

-1000-900-800-700-600-500-400-300-200-100

0100200300400

2007 2008 2009 2010 2011 2012 2013

Thou

sand

s

Private Payrolls 3 Month Moving Average6 Month Moving Average 12 Month Moving Average

Source: Bloomberg

-5%

-3%

-1%

1%

3%

5%

7%

9%

11%

13%

15%

17%

1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 2013

Year

-Ove

r-Ye

ar P

erce

ntag

e Ch

ange

Nominal GDP Total Credit Creation Private Financial Instiutions

Source: Federal Reserve, Bloomberg

Adjusted R2=.64

u.S. Growth hinges on Easing of federal fiscal restraint, Corporate reactions to Growth

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01.15.14 www.bloombergbriefs.com Bloomberg Brief | economics 2013 Global Review 8

Inflationary pressures in the euro area are likely to remain weak this year. That development sets the stage for additional monetary easing.

The European Central Bank is failing to meet its target. The consumer price index increased 0.8 percent year over year in December. The core reading was 0.7 percent. The monetary authority “aims to maintain inflation rates below, but close to, 2 percent over the medium term.”

A deceleration of inflation is likely to continue next year. High unemployment and weak credit growth will probably limit price increases.

The level of unemployment points to slack in the economy. The November reading of 12.1 percent was just below the record 12.2 percent set in September. The Organisation for Economic Cooperation & Development estimates the non-accelerating inflation rate of unemployment to be 10.2 percent.

Lending data also give reason for con-cern. Loans to non-financial corporations, adjusted for sales and securitization, fell 3.1 percent year over year in November after a 3 percent decline in October. The equivalent figure for households stood at 0.3 percent year over year, unchanged from the previous month.

Quantitative easing may ultimately be the most attractive option to the ECB. Others include: 1) a reduction of the main policy rate; 2) a negative deposit rate; 3) additional lending programs such as another three-year longer-term refinancing operation; 4) more forward guidance; 5) currency intervention.

The purchase of privately-held assets by the central bank would be the most effec-tive way to lower targeted interest rates. The ECB could use its balance sheet to reduce borrowing costs wherever the Gov-erning Council feels the “monetary policy transmission mechanism” is still “broken.”

Wide disparities in corporate borrowing costs remain throughout the monetary union. For example, the interest rate on new loans with maturities of more than five years

(other than revolving loans and overdrafts, convenience and extended credit card debt) to non-financial corporations up to and including 1 million euros in Italy was 5.66 percent in October, according to data from the ECB. The equivalent figure for Germany was 2.95 percent. Those rates would prob-ably apply more to small- and medium-sized companies than large corporates.

A reduction of the main policy rate may still be an intermediate step. It would be mostly symbolic. It is already close to the zero bound at a historic low of 25 basis points.

The introduction of a negative deposit rate seems unlikely. The ECB has rarely — if ever — been willing to be at the cut-ting edge of experimental monetary policy. No other major central bank has ever pursued that policy.

Another three-year LTRO would probably be insufficient in the face of weak demand. The amount of funds borrowed by banks under the longer-term refinancing opera-tions has declined to 583 billion euros from a high of 1.1 trillion euros in March 2012, though the aggregate figure may hide addi-tional demand from the peripheral countries.

The lack of demand may discourage the Governing Council from implementing a “Funding for Lending Scheme.” The pro-gram introduced by the Bank of England was similar to a four-year LTRO, though borrowers were unable to buy securities with the loans. A version for the euro area seems unlikely to increase lending any more than the three-year LTROs did.

The impact of additional forward guid-ance may be limited. The forward curve analysis function {FWCV <GO>} on the Bloomberg terminal indicates the EUR OIS curve has priced in a one-month rate of 20 basis points in one year. That is only 6 basis points lower than the reading on the eve of the policy announcement from the ECB.

Currency intervention appears unlikely. Academic studies and history have shown attempts by central banks to influence the exchange rate normally fail unless accompanied by a broadcast change in monetary policy.

Quantitative easing is therefore likely to be required and that would probably weaken the euro without the ECB selling the currency.

EurOPE OutlOOk Commentary By david powell, BloomBerg eConomiSt

weak Euro-Area Inflation likely to Prompt Additional Monetary Easing from ECb

-1

0

1

2

3

4

5

12/1/02 5/1/04 10/1/05 3/1/07 8/1/08 1/1/10 6/1/11 11/1/12

Euro-Area Headline CPI (YoY, %)

Core CPI (YoY, %)

ECB's Inflation Target (YoY, %)

Source: Bloomberg ECCPEMUY Index <GO>; CPEXEMUY Index <GO>

Ecb Fails to Meet Inflation target

Follow DAVID POWELL on TwitterFOr rEguLAr uPDATEs AnD ADDITIOnAL InsIghTs @davidjpowell24

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01.15.14 www.bloombergbriefs.com Bloomberg Brief | economics 2013 Global Review 9

The U.S. Congress’s two-year budget deal and the Federal Reserve’s gentle start to reducing its bond purchases both removed key sources of market anxiety and set up scope for a seasonal rally in emerging Asia during the first quarter of 2014.

Investors may find comfort that in the previous Fed tightening cycle, average growth in Asia held above 5 percent and regional currencies rallied 5 per-cent against the U.S. dollar after they recovered from initial wobbles. While the external backdrop may have brightened, many Asian economies will continue to face internal headwinds in 2014. Specula-tion over China’s outlook may also hang over the region.

china’s new leaders promised a renewed commitment to reform, target-ing sustained growth as the country’s old economic model runs out of steam. Policy changes aim to increase labor force participation and to improve the efficiency of investment. Leaders hope these measures will be enough to secure medium-term growth at about the current 7.5 percent level. Managing down runaway lending, which has seen outstanding credit rise to 200 percent of GDP, will be difficult without denting growth. The gov-ernment said controlling local-government borrowing will be a key task for 2014, a move that may damp infrastructure invest-ment and demand for commodities. A stronger recovery in global demand would boost exports and give policy makers more breathing space.

Japan’s headlong dash for growth in 2013 will change to a more complex picture in 2014. A tighter fiscal stance as the government faces down massive public debt will act as a drag. As govern-ment reduces its spending, attention will focus on Abenomics and whether the policies have increased demand from business investment and household consumption. Early signs are positive; stronger export growth has triggered higher investment. Generous wage set-tlements in the first quarter of 2014 will be critical to boosting consumption. The Bank of Japan has the option to expand stimulus if the tighter fiscal policy ap-

pears to take too much momentum out of the economy. More aggressive easing could see the yen extend its slide. The Japanese currency will end 2014 at 110 to the dollar, according to the consensus forecast, compared with around 105 at the end of 2013.

Without dramatic improvements in ex-ports or in investment, the Reserve Bank of Australia may need to provide further policy support for employment, confi-dence and growth via a weaker currency or lower interest rates. Australia’s job mar-ket is at its weakest since 2009. Rate cuts of 225 basis points since November 2011 have yet to bear fruit amid rebalancing in China, its largest trading partner.

Singapore’s economy demonstrated re-silience to Fed tapering jitters and China’s rebalancing. Growth approached 6 percent year on year in the third quarter of 2013 with domestic demand supported by low unemployment and rising real wages. Viewed increasingly as a safe-haven, the city-state’s financial sector achieved remarkable double-digit gains in the first nine months of 2013. In 2014, Singapore will benefit as a recently-established off-shore yuan center.

Investors will watch election outcomes in India and Indonesia and look for

signs of policy prudence during the new governments’ respective tenures. Both countries need a reversal in sentiment. India in particular needs to break out of its vicious circle of slower investment and growth.

In the Philippines, the destructive impact from Super Typhoon Haiyan on growth (which will be slower) and infla-tion (which will be higher) should start to fade by the second half of the year. Government efforts to attract investment in roads, railways and ports to lift the country’s growth potential to as much as 8 percent bore fruit in 2013. A power-sharing arrangement with Muslim rebels in Mindanao signals progress in tapping the country’s mineral wealth, estimated to be worth as much as four times the size of the economy.

South Korea’s open economy will be buffeted by shifts in global demand and capital flows. In an optimistic scenario, stronger global demand will boost exports and the Fed will manage its tapering of asset purchases without triggering desta-bilizing volatility. If stronger global demand fails to materialize, high debt in Korea’s households means domestic demand will struggle to pick up the slack.

ASIA OutlOOk Commentary By tamara henderSon and tom orlik, BloomBerg eConomiStS

Previous fed tightening Suggests Asian resilience

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←Asian Currencies Versus U.S. Dollar (ADXY)

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Asian currencies recovered From Initial Wobble

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01.15.14 www.bloombergbriefs.com Bloomberg Brief | economics 2013 Global Review 10

CENtrAl bANk MONItOr BY BLOOMBERG ECONOMISTS

Developed world banks Still have a Need for unconventional tools in 2014

High debt, not high inflation, will be the main challenge for China’s central bank in 2014. Outstanding credit has ballooned from about 130 percent of GDP in 2008 to close to 200 percent in 2013. To bring that under control, the People’s Bank of China is pushing borrowing costs higher. The central bank is also shifting from use of quantitative tools such as loan quotas, to price tools such as market-set interest rates, to achieve its objectives.

U.S. monetary policy is likely to shift from a reliance on asset purchases to forward guidance as the primary pol-icy tool. The major challenge for the Fed will be to convince investors that tapering is not tightening, forward guidance is more than just talk and that it truly intends to hold the policy rate at zero until 2016. This year may feature a re-duction in the unemployment threshold to 6 percent and the imposition of an inflation floor of 1 percent.

The decline of core inflation in the euro area to a record low is likely to push the ECB to reduce its main policy rate again. The move would be mostly symbolic. Quantita-tive easing may ultimately be the most attractive option for the central bank to lower targeted interest rates such as corporate borrowing costs in the peripheral nations.

Policy Rate Ticker CountryNext Meets

PolicyRate

Taylor Rule

3M Chg

6M Chg

1YChg

CPIy/y

3MChg

Prior12M

Est. 1Q14

Est. 2Q14

Est. 3Q14

Est. 4Q14

BAIBPMOD Index Argentina 13.00% 125 0 330 10.5%RBATCTR Index Australia 2/4 2.50% 4.20% 0 -25 -75 2.2% 2.38% 2.38% 2.38% 2.50%BJIRONRR Index Bahrain 2.25% 0 0 0 3.6%BZSTSETA Index Brazil 1/15 10.00% 150 250 275 5.9% 10.38% 10.38% 10.38% 10.50%BUBIRATE Index Bulgaria 1/31 0.02% -1 0 -1 -1.5%CABROVER Index Canada 1/22 1.00% 3.35% 0 0 0 0.9% 1.00% 1.00% 1.00% 1.13%CHOVCHOV Index Chile 1/16 4.50% -50 -50 -50 3.0% 4.25% 4.25% 4.25% 4.25%CHLR12M Index China 6.00% 0 0 0 2.5% 6.00% 6.00% 6.00% 6.00%CORRRMIN Index Colombia 1/31 3.25% 0 0 -100 1.9% 3.38% 3.63% 3.88% 4.13%CKDRRATE Index Croatia 7.00% 0 0 0 0.4% 6.00% 6.00% 6.00% 6.00%CZARANN Index Czech Rep. 2/6 0.05% 0 0 0 1.4% 0.00% 0.00% 0.00% 0.13%DERE Index Denmark 0.20% 0.30% 0 0 0 0.8% 0.25% 0.25% 0.25% 0.38%EGBRLR Index Egypt 9.25% -100 -150 -100 11.7%EURR002W Index Euro zone 2/6 0.25% -1.30% -25 -25 -50 0.8% 0.25% 0.25% 0.25% 0.25%HKBASE Index Hong Kong 0.50% 0 0 0 4.3%HBBRANN Index Hungary 1/21 3.00% -80 -150 -300 0.9% 3.25% 3.25% 3.25% 3.25%ICBRANN Index Iceland 2/12 6.00% 0 0 0 4.2%RSPOYLDP Index India 1/28 6.75% 50 50 -25 11.5% 7.00% 6.88% 6.75% 6.50%IDBIRATE Index Indonesia 2/13 7.50% 25 150 175 8.4% 7.75% 7.88% 7.75% 7.50%ISBRANN Index Israel 1/27 1.00% 0 -25 -100 1.9% 0.88% 0.88% 1.13% 1.25%BOJDTR Index Japan 0.10% 1.45% 0 0 0 1.5% 0.10% 0.10% 0.10% 0.10%JORRRATE Index Jordan 4.25% -25 -50 -50 3.3%KIBODISC Index Kuwait 2.00% 0 0 0 2.6%LTRFANN Index Latvia 0.25% -175 -225 -225 -0.4%LREPRR Index Lebanon 10.00% 0 0 0 0.6%MAOPRATE Index Malaysia 1/29 3.00% 0 0 0 2.9% 3.00% 3.13% 3.13% 3.25%MXONBR Index Mexico 1/31 3.50% 4.17% -25 -50 -100 4.0% 3.50% 3.50% 3.63% 3.63%MOBRRC Index Morocco 3/19 3.00% 0 0 0 1.0%NZOCR Index New Zealand 1/29 2.50% 1.10% 0 0 0 1.4% 2.63% 3.00% 3.13% 3.38%NOBRDEPA Index Norway 3/27 1.50% 3.05% 0 0 0 2.0% 1.50% 1.50% 1.63% 1.50%OCBOREPO Index Oman 1.00% 0 0 0 0.5%PAPRSBP Index Pakistan 1/13 10.00% 100 50 0 9.2%PRRRONUS Index Peru 2/13 4.00% -25 -25 -25 2.9% 4.00% 3.88% 3.88% 3.88%PPCBON Index Philippines 2/6 3.50% 0 0 0 4.1% 3.50% 3.63% 3.75% 3.88%POREANN Index Poland 2/5 2.50% 0 0 -175 0.6% 2.50% 2.50% 2.63% 2.88%QAIRRR Index Qatar 4.50% 0 0 0 1.4%ROKEPOLA Index Romania 2/4 3.75% -50 -125 -150 1.8% 3.63% 3.63% 3.63% 3.75%RREFRANN Index Russia 8.25% 0 0 0 6.5% 7.63% 7.50% 7.38% 7.25%SRREPO Index Saudi Arabia 2.00% 0 0 0 3.1%SIBCON Index Singapore 0.01% -14 -2 0 2.6%SARPRT Index South Africa 1/29 5.00% 0 0 0 5.3% 5.00% 5.00% 5.13% 5.25%KORP7DR Index South Korea 2/13 2.50% 4.45% 0 0 -25 1.1% 2.50% 2.50% 2.50% 2.75%SWRRATEI Index Sweden 2/13 0.75% 0.55% -25 -25 -50 0.1% 1.00% 1.00% 1.00% 1.13%SZLTTR Index Switzerland 3/20 0.00% 1.45% 0 0 0 0.1% 0.00% 0.00% 0.00% 0.00%TAREDSC Index Taiwan 3/25 1.88% 0 0 0 0.3% 1.88% 1.88% 2.00% 2.00%BTRR1DAY Index Thailand 1/22 2.25% -25 -50 -50 1.7% 2.25% 2.38% 2.50% 2.75%TUBR1WRA Index Turkey 1/21 4.50% 11.5% 0 0 7.4% 4.75% 5.13% 5.25% 5.38%CUAE1-7 Index U.A.E. 1.00% 0 0 0 1.4%UKRBDIS Index Ukraine 6.50% 0 -50 -100 0.5% 6.38% 6.25% 6.00% 6.00%UKBRBASE Index U.K. 2/6 0.50% 2.50% 0 0 0 2.1% 0.50% 0.50% 0.50% 0.50%FDTR Index U.S. 1/29 0.25% 0.68% 0 0 0 1.2% 0.25% 0.25% 0.25% 0.25%VNBOLOAN Index Venezuela 15.66% -395 -410 -41 51.7%VNDIBASE Index Vietnam 9.00% 0 0 0 6.0%Source: Bloomberg

Bloomberg Brief Global Central Bank Monitor

As the Fed begins moving away from non-traditional monetary policy, Japan’s remains in full-swing and the European Central Bank may soon enter the fray with the euro zone near the zero boundary. The expectation of rising rates in the U.S. may force some emerging market central banks to prematurely increase interest rates to reduce the amount of capital flowing out of their countries. Brazil’s central bank been one of the most aggressive tighteners over the past six months, increasing its target rate by 250 basis points due to a combination of rising prices and capital outflows that followed May indications of an imminent taper from Fed Chairman Ben S. Bernanke.

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01.15.14 www.bloombergbriefs.com Bloomberg Brief | economics 2013 Global Review 11

YoY 52W Average 52W LAST YoY 52W Average 52W%Chg Min Last Max YIELD BPS Min Last Max

Asia/Pacific Asia/PacificMXAU Index Australia 1086.4 13.6% 956 1115 GACGB10 Index Australia 4.32% 92.1 3.0 4.4MXCN Index China 61.4 -5.2% 51 66 GCNY10YR Index China 4.62% 102.0 3.4 4.7MXHK Index Hong Kong 12205.2 3.8% 10,600 12380 HKGG10Y Index Hong Kong 2.41% 156.8 0.8 2.6MXID Index Indonesia 4841.2 -7.6% 4,487 6149 GIDN10YR Index Indonesia 8.94% 378.1 5.2 9.1MXIN Index India 804.0 4.0% 699 818 GIND10YR Index India 8.79% 89.5 7.1 9.2MXJP Index Japan 807.5 48.8% 548 808 GJGB10 Index Japan 0.70% -13.0 0.4 0.9MXKR Index Korea 569.7 -1.2% 509 605 GVSK10YR Index Korea 3.67% 62.4 2.7 3.8MXMY Index Malaysia 654.1 9.3% 574 669 MGIY10Y Index Malaysia 4.17% 66.1 3.1 4.2MXPH Index Philippines 1013.2 0.8% 941 1224 PDSF10YR Index Philippines 4.27% -9.5 3.0 4.6MXSG Index Singapore 1686.2 -0.9% 1,602 1823 MASB10Y Index Singapore 2.56% 116.0 1.3 2.8MXLK Index Sri Lanka 688.5 12.6% 598 778 GGSL10YR Index Sri Lanka 9.84% -143.2 9.8 12.1TAMSCI Index Taiwan 296.7 7.0% 273 303 GVTW10YR Index Taiwan 1.69% 51.8 1.2 1.7MXTH Index Thailand 452.3 -13.1% 432 573 GVTL10YR Index Thailand 4.05% 39.7 3.3 4.4MXVI Index Vietnam 555.6 -3.4% 509 629

North America North AmericaMXUS Index U.S. 1758.3 25.9% 1,406 1768 USGG10YR Index U.S. 2.99% 113.6 1.6 3.0MXCA Index Canada 1723.2 9.3% 1,495 1726 GCAN10YR Index Canada 2.72% 80.9 1.7 2.8MXMX Index Mexico 6785.6 -8.6% 5,951 7772 GMXN10YR Index Mexico 6.48% 104.5 4.4 6.6

South America South AmericaMXAR Index Argentina 1919.2 44.1% 1,158 2258 ArgentinaMXBR Index Brazil 2140.5 -23.2% 2,053 2839 GEBR10Y Index Brazil 10.88% 85.0 9.2 11.6MXCL Index Chile 1800.2 -28.3% 1,793 2601 ChileMXCO Index Colombia 1011.5 -26.1% 1,011 1393 COGR10Y Index Colombia 6.79% 133.0 4.7 7.6MXPE Index Peru 1080.7 -33.2% 1,020 1681 GRPE10Y Index Peru 5.59% 147.0 3.9 6.1

Middle East & Africa Middle East & AfricaMXEG Index Egypt 1390.9 8.5% 992 1399 EGPT10Y ARAB Index Egypt 15.00% 14.9 17.0MXIL Index Israel 200.2 7.4% 179 202 GISR10YR Index Israel 3.67% -38.0 3.5 4.1MSEUSJO Index Jordan 97.4 -6.5% 82 112 JordanMXNI Index Nigeria 817.2 19.4% 674 856 CTNGN10Y Govt Nigeria 13.11%MSEUSTK Index Turkey 445.4 -31.8% 431 737 IECM10Y Index Turkey 10.04% 340.0 6.1 10.6MXZA Index South Africa 1122.3 9.4% 916 1147 GSAB9YR Index South Africa 7.99% 168.3 5.8 8.0MXAE Index U.A.E. 408.3 71.9% 238 416 U.A.E.

Europe EuropeEuro Area Euro Area

MXAT Index Austria 125.1 7.2% 101 125 GAGB10YR Index Austria 2.26% 42.9 1.5 2.5MXBE Index Belgium 74.6 19.6% 62 75 GBGB10YR Index Belgium 2.57% 37.7 1.9 2.9MXEST Index Estonia 864.8 0.3% 820 992 EstoniaMXFI Index Finland 99.7 30.5% 72 101 GFIN10YR Index Finland 2.11% 43.8 1.3 2.3MXFR index France 119.2 14.9% 100 120 GFRN10 Index France 2.57% 46.8 1.7 2.6MXDE Index Germany 130.5 20.3% 105 132 GDBR10 Index Germany 1.92% 43.8 1.2 2.0MXGR Index Greece 19.8 50.1% 12 20 GGGB10YR Index Greece 7.71% -389 7.7 12.8MXIE Index Ireland 36.7 40.4% 25 37 GIGB9YR Index *Ireland (9Y) 3.28% -112.3 3.3 3.3MXIT Index Italy 55.8 8.0% 43 56 GBTPGR10 Index Italy 3.93% -34.8 3.8 4.9MXNL Index Netherlands 100.9 20.6% 82 101 GNTH10YR Index Netherlands 2.22% 56.2 1.5 2.5MXPT Index Portugal 54.4 1.9% 47 GSPT10YR Index Portugal 5.39% -112.4 5.2 7.5SKSM Index Slovakia 194.4 3.1% 179 202 GRSK10Y Index Slovakia 2.58% 43.7 2.1 3.1MXES Index Spain 112.4 19.4% 81 112 GSPG10YR Index Spain 3.80% -133.2 3.8 5.4

Non-Euro EU Non-Euro EUMXBU Index Bulgaria 203.6 84.6% 111 204 BulgariaMXCZ Index Czech Republic 252.8 -14.3% 223 290 CZGB10YR Index Czech Republic 2.54% 58.4 1.5 2.6MXDK Index Denmark 5454.9 16.2% 4,322 5455 GDGB10YR Index Denmark 1.96% 42 1.3 2.2MXHU Index Hungary 900.3 -13.5% 880 1107 GHGB10YR Index Hungary 5.46% -66.0 4.9 6.8RIGSE Index Latvia* 465.7 13.7% 395 473 Latvia*VILSE Index Lithuania 437.1 19.3% 367 438 LithuaniaMXPL Index Poland 1673.0 -5.5% 1,543 1852 POGB10YR Index Poland 4.49% 66.4 3.1 4.9MXRO Index Romania 681.4 15.1% 542 681 GRRO5YR Index *Romania (5Y) 3.00% -171.5 3.0 4.5MXSE Index Sweden 10089.9 17.2% 8,495 10142 GSGB10YR Index Sweden 2.46% 76.0 1.6 2.7MXGB Index U.K. 1982.9 9.7% 1,783 2023 GUKG10 Index U.K. 2.98% 95.9 1.6 3.1

Non EU Non EUICEXI Index Iceland 879.7 23.3% 724 886 IcelandMXNO Index Norway 2631.1 11.8% 2,256 2674 GNOR10YR Index Norway 2.95% 77.2 2.0 3.3MXRU Index Russia 756.6 -9.1% 668 863 MICXRU10 Index Russia 8.01% 116.8 6.7 8.4MXCH Index Switzerland 1082.9 16.8% 926 1083 GSWISS10 Index Switzerland 1.25% 67.2 0.6 1.3MXUK Index Ukraine 122.9 -18.3% 110 228 Ukraine

10 YEAR GOVERNMENT BOND YIELDS

TICKER COUNTRY LAST PRICE TICKER COUNTRY

MSCI EQUITY INDEXES

MArkEt INDICAtOrS BY BLOOMBERG BRIEF EDITORS

Mouse Over Commentary for Connections

*All data as of Jan. 9. *Latvia joined the euro zone Jan. 1. Source: Bloomberg

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01.15.14 www.bloombergbriefs.com Bloomberg Brief | economics 2013 Global Review 12

LAST YoY 52W Average 52W TICKER LAST YoY 52W Average 52WPRICE bps/% Min Last Max PRICE %CHG Min Last MaxU.S. Asia/Pacific

$$SWAP10 Curncy 10Y US Swap Spread 9.25% 6.5 2.8 25.5 AUD Curncy Australian Dollar 0.89 -15.5% 0.9 1.1USGGBE05 Index 5Y Breakeven Rate 1.94% -20.9 1.6 2.4 CNY Curncy Chinese Renminbi 6.06 2.8% 6.1 6.2.2Y10Y Index 2Y10Y Spread 256.39 142.9 264.8 HKD Curncy Hong Kong Dollar 7.75 0.0% 7.8 7.8.TED3M Index 3M Ted Spread 20.62 -4.3 14.2 26.3 INR Curncy Indian Rupee 62.08 -11.8% 53.1 68.8.LIBORIOS Index 3M Libor/OIS 14.9 -2.1 13 18 IDR Curncy Indonesian Rupiah 12193.0 -20.7% 9618 12261.AAABAA Index IG HY Corp Spread 79.00 -15.0 72.0 108.0 JPY Curncy Japanese Yen 104.73 -16.1% 88.4 105.3MUNSMT10 Index Muni Spread 96.97 0.0 86.4 115.4 MYR Curncy Malaysian Ringgit 3.28 -7.3% 3.0 3.3

Euro Area NZD Curncy New Zealand Dollar 0.82 -1.8% 0.8 0.9EUR003M Index 3M Euribor 0.28% 0.1 0 0 PHP Curncy Philippine Peso 44.67 -8.7% 40.6 44.8EONIA Index EONIA 0.14% 0.1 0.1 0.4 SGD Curncy Singapore Dollar 1.27 -3.5% 1.2 1.3EUSA10 Index EUR 10Y Swap Rate 2.18% 0.5 1.4 2.4 KRW Curncy South Korean Won 1062.70 -0.1% 1050 1161

Europe Non-Euro EU LKR Curncy Sri Lankan Rupee 130.70 -3.4% 125.4 133.2BUBOR03M Index Hungary BUBOR 2.99% -2.7 3.0 5.7 TWD Curncy Taiwan Dollar 30.17 -3.8% 28.9 30.2WIBO3M Index Poland WIBO 3M 2.60% -1.4 2.5 3.9 THB Curncy Thai Baht 33.03 -8.0% 28.7 33.1BP0003M Index U.K. LIBOR GBP 3M 0.52% 0.0 0.5 0.5 VND Curncy Vietnamese Dong 21095 -1.2% 20825 21243

Europe Non-EU EuropeMOIB91 Index Russia Moscow Intbk 7.42% -0.1 7.3 7.8 GBP Curncy British Pound 1.65 2.7% 1.5 1.7SF0003M Index Switzerland LIBOR CHF 0.02% 0.0 0.01 0.02 CZK Curncy Czech Koruna 20.18 -2.9% 18.6 20.3

China DKK Curncy Danish Krone 5.49 4.0% 5.4 5.8SHIF3M Index 3M SHIBOR 5.58% 168.1 3.9 5.8 EUR Curncy Euro 1.36 4.0% 1.3 1.4CCSDO2 Curncy 2Y CNY IRS 3.05% 12.0 2.9 3.1 HUF Curncy Hungarian Forint 220.3 0.7% 212 238BOCRYLD Index Avg Dim Sum Yield 4.34% -57.0 3.8 6.0 ISK Curncy Iceland Krona 117.01 10.9% 115.0 129.5

Japan NOK Curncy Norwegian Krone 6.19 -9.6% 5.5 6.3JY0003M Index LIBOR 3M 0.15% -2.8 0.1 0.2 PLN Curncy Polish Zloty 3.07 1.6% 3.0 3.4TI0003M Index 3M TIBOR 0.22% -8.8 0.2 0.3 RON Curncy Romanian Leu 3.34 0.7% 3.2 3.5JYSW2 Curncy 2Y Yen Swap 0.21% -2.1 0.2 0.3 RUB Curncy Russian Ruble 33.23 -8.7% 29.9 33.5

Other Global SEK Curncy Swedish Krona 6.56 0.1% 6.3 6.8CHF Curncy Swiss Franc 0.91 1.9% 0.9 1.0

CIBO03M Index Denmark CIBOR 3M 0.27% -0.7 0.2 0.4 UAH Curncy Ukranian Hryvnia 8.27 -2.0% 8.1 8.3JPEIPLSP Index EMBI+ Spread 339.72 94.7 242.8 389.0 AmericasHIHD03M Index Hong Kong 3M HIBOR 0.38% -2.1 0.4 0.4 ARS Curncy Argentina Peso 6.63 -25.5% 4.9 6.6JIIN3M Index Indonesia 3M JIBOR 7.87% 291.4 4.9 7.9 BRL Curncy Brazilian Real 2.40 -15.0% 1.9 2.5NSERO3M Index India 3M MIBOR 9.15% 38.0 8.2 11.6 CAD Curncy Canadian Dollar 1.09 -9.0% 1.0 1.1SIBF3M Index Singapore SIBOR 3M 0.40% 2.8 0.4 0.4 CLP Curncy Chilean Peso 533.84 -11.7% 467.1 534.5KWSWOOC Curncy S. Korea 3M OIS 2.49% -32.0 2.5 2.8 COP Curncy Colombian Peso 1934.97 -8.6% 1759.0 1956.3TRLIB3M Index Turkey TRLIBOR 3m 9.12% 332.9 4.7 9.1 MXN Curncy Mexican Peso 13.15 -3.3% 12.0 13.4

PEN Curncy Peruvian Sol 2.80 -9.0% 2.5 2.8LAST YoY 52W Average 52W Middle East & AfricaPRICE %Chg Min Last Max EGP Curncy Egyptian Pound 6.96 -6.5% 6.5 7.0

Agricultural IRR Curncy Iranian Rial 24653 -50.2% 12229 24853C 1 Comdty Corn 408.50 -41.2% 408.5 741.3 ILS Curncy Israeli Shekel 3.50 8.0% 3.5 3.7KC1 Comdty Coffee 120.00 -18.9% 101.5 156.3 MAD Curncy Moroccan Dirham 8.26 3.2% 8.1 8.7SB1 Comdty Sugar 15.44 -17.5% 15.4 19.5 NGN Curncy Nigerian Naira 158.87 -1.6% 156.1 163.9W 1 Comdty Wheat 580.00 -22.2% 580.0 791.3 ZAR Curncy South African Rand 10.81 -20.5% 8.6 10.8

Metals SYP Curncy Syrian Pound 142.66 -50.2% 69.4 142.9LA1 Comdty Aluminum 1733.00 -14.8% 1700 2128 TRY Curncy Turkish Lira 2.19 -18.8% 1.7 2.2HG1 Comdty Copper 329.45 -10.2% 302.4 378.5 AED Curncy UAE Dirham 3.67 0.0% 3.7 3.7GC1 Comdty Gold 1223.50 -26.1% 1195 1693 EUR CrossesSI1 Comdty Silver 19.5 -35.5% 18.5 32.4 EURSEK Curncy EUR/SEK 8.92 -3.8% 8.3 9.1

Energy EURGBP Curncy EUR/GBP 1 -1.3% 1 1CO1 Comdty Crude (Brent) 107.05 -4.2% 97.7 118.9 EURNOK Curncy EUR/NOK 8.42 -13.1% 7.3 8.5CL1 Comdty Crude (WTI) 91.84 -1.4% 86.7 110.5 EURCHF Curncy EUR/CHF 1.23 -2.1% 1.2 1.3XB1 Comdty Gasoline 266.1 -4.3% 250.3 320.4 EURJPY Curncy EUR/JPY 142.35 -19.3% 117.5 145.1NG1 Comdty Natural Gas 4.11 32.0% 3.2 4.5 JPY Crosses

Indexes AUDJPY Curncy AUD/JPY 93.05 -0.7% 86.7 105.2CRY Index CRB Index 273.42 -7.0% 272.5 305.1 GBPJPY Curncy GBP/JPY 172 -18.3% 139 174BDIY Index Baltic Dry Index 1826.00 148.8% 735 2337 EURJPY Curncy EUR/JPY 142.35 -19.3% 117.5 145.1CMDI3MO Index Bloomberg 3M Cmdty 229.52 -7.2% 217.8 253.2 CHFJPY Curncy CHF/JPY 115.31 -17.6% 94.9 118.5DBLCDBAT Index DBIQ Diversified Ag 201.0 -11.2% 200.0 228.0 NOKJPY Curncy NOK/JPY 16.91 -7.1% 15.9 17.7

CURRENCIESOTHER INDICATORS

SPREAD/RATE/INDEX CURRENCYTICKER

TICKER COMMODITY

COMMODITIES

MArkEt INDICAtOrS BY BLOOMBERG BRIEF EDITORS

Mouse Over Commentary for Connections

*All data as of Jan. 9. Source: Bloomberg

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01.15.14 www.bloombergbriefs.com Bloomberg Brief | economics 2013 Global Review 13

Fiscal stalemate pushed the U.S. to the edge of default. The Federal Reserve gave investors months to prepare for a reduction in stimulus, even surprising analysts with no tapering in September. Europe’s economy continued to improve, with echoes of crisis in Italy and Cyprus. China embraced reform even as it showed signs of an economic slowdown. These stories that moved markets in 2013 will continue to play out in the coming year.

The chart below highlights investors’ responses to economic events and other news across equities, foreign exchange, fixed income and commodities, using proxy indexes for each market.

MArkEtS By BloomBerg Brief editorS

u.S. fiscal Debate, fed tapering, Euro-Area Politics had biggest Investor Impact in 2013

CLICK THE INDEX TITLE BOX TO DISPLAY SPECIFIC EVENTS FOR THAT PARTICULAR ASSET CLASS.

Source: Bloomberg

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01.15.14 www.bloombergbriefs.com Bloomberg Brief | economics 2013 Global Review 14

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It’s what the CGMA® designation stands forOfficially, it’s Chartered Global Management Accountant®. Established by AICPA and CIMA, two of the world’s most prestigious accounting

bodies, the CGMA designation represents accomplished professionals who drive and deliver business success, worldwide.

Find out more at cgma.org

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