The IMF has reduced its 2014 US economic growth forecast

The International Monetary Fund has reduced its 2014 U.S economic growth forecast to 2% from the 2.8% it predicted in April, due to a weak first quarter, although the fund has maintained its 3% growth outlook for 2015. Markets are predicting the Fed to start raising rates in the middle of next year, although the IMF related that it is not certain about the expected increase. Rates have been near zero since late 2008.

ECB Negative Interest rates policy leads to increase in carry trades in euro

The European Central Bank's cut to its main lending rate and institution of negative interest rates earlier this month has spelled trouble for the euro. After hitting a 2-1/2 year high in early June, the euro has declined over 3%, due to monetary easing and increase in carry trades. Data released last week shows the net short position for the euro/dollar reaching its highest level since late May 2013.

Poor Monsoon will have significant impact on India's GDP.

While the South West monsoons have already made their presence felt in some parts of India abating worries of a delayed rainfall, fears of El Nino have still not subsided completely. Many forecasts continue to claim that El Nino will disrupt India's monsoon this season. It may be noted that El Nino phenomenon has occurred thrice in India since 2004 resulting in below average rainfall in the respective years. Out of these three occasions India faced a drought like situation twice.

Thus, a forecast of El Nino this year sounds a grave concern for India. Particularly because India is an agrarian economy. A below average rainfall can hurt agriculture growth in India and thus put GDP growth under pressure. Further, fall in agricultural growth can also lead to a decline in farm income. This will impact the rural spending as disposable incomes decline. Lastly, poor rainfall may also lead to a spiral in food prices. All these factors indicate how a deficient monsoon could spell a death knell for Indian economy. That is why it is important that the government focuses on ramping up infrastructure in agriculture; particularly by bringing more of the land under irrigation

China has surpassed U.S.as the largest issuer of corporate debt.

As the world’s largest issuer of corporate debt, according to a report released today by S&P. However, S&P approximates that around one-quarter to one-third of China’s corporate debt comes from the country’s shadow banking sector - non-bank lending that caters to borrowers who have difficulty obtaining financing. In turn, this raises red flags of the ability for Chinese companies to make interest payments and repay their bank loans.

Eight years have passed since the subprime crisis surfaced in the US. And by now it is fading from our memories. However, China seems to be preparing to remind us of it. As per an article in Bloomberg, the current trend of 'zero down payment 'in China is a scary reminder of the subprime bubble. The ghost cities in China are a reflection of the frothy property market. However, in a bid to remove the signs of glut in property markets, the housing financers are easing up down payment norms. The authorities defend the decision citing the need to offer easy payment terms to students and fresh graduates. However, loosening down-payment requirements could erode China's financial stability. Banks in the country already have a shoddy track record in sustaining asset quality. In addition by allowing realty companies to flourish, the economy could be skirting with a banking crisis in the years to come. At a time when China is headed towards the weakest growth in 24 years, a subprime crisis-of-sorts could lead the economy to a very hard landing.

Indian IIP grew after two months of contraction

Output as measured by the index of industrial production grew by 3.4% in April after two consecutive months of contraction. Manufacturing which constitutes 75% of the index grew by 2.6%.    

Indian CPI for May at three month low

Consumer price inflation for May came in at a three-month low of 8.28%, lower than the 8.59% in April. Core inflation stood at 7.72%, while food inflation was 9.56%.