UK chancellor George Osborne may well be patting himself on the back as the UK economy grew 0.8% in the latest quarter, back to pre-crash growth levels. UK consumer spending between April and June grew at its fastest pace of any quarter in 10 years, despite dipping last month which is expected to be short term and the International Monetary Fund predicts UK growth will surge to 3.2% by year end. This data is all very encouraging for the UK’s economic recovery. Sovereigns EUR: - Yields for Italian, Spanish and Portuguese bonds are 2-4bp lower today as the ECB stimulus announced last month appears to be, for now, abating concerns related to the current political turmoil in Ukraine and Middle East. Other: - The reserve Bank of India sold 70 billion Rupees of 10 year paper at auction today at a cutoff yield of 8.40% which was lower than the current benchmark bond yield. In total, the RBI auctioned 140 billion rupees in total across four bonds. The existing 10 year benchmark was trading at 100.99 rupees with a yield of 8.67% at 2.47pm. N.S. Venkatesh, executive director at IDBI bank said “we saw a lot of buying from local banks and primary dealers in today’s 10 year bond auction� and “there was not much activity from foreign investors�. He also said that he expects the new 10 year issue to trend downwards in the coming days as the paper becomes more liquid with more auctions. To plug the fiscal deficit the government aims to borrow 6.34 trillion rupees from the local bond market. – Arun Jaitley, India’s finance minister announced today that India’s inflation cannot be curbed solely by increasing interest rates and added that increasing manufacturing activity and supplies can help ease price gains. - The central banks of Sri Lanka and India have agreed that they will buy up to $500mn in each other’s government debt to diversity their currencies. A statement put out by the Sri Lankan bank said that “The central bank of Sri Lanka could now access one of the growing securities markets in the world, realising a considerably higher return for the funds invested,� and “At the same time, the RBI investments in the Sri Lankan government securities market would lead to greater stability in the Sri Lankan government bond market� - Additionally, the Sri Lankan rupee rose to near a 1 week high on Friday which was bolstered by heavy inward remittances for the Ramadan festival. The rupee traded at130.21/24 vs dollar at 6:09 am GMT. - Ukraine’s Prime Minister Yatsenyuk tendered his resignation yesterday, accusing parliament of failing to pass legislation to take control over the country’s increasingly precarious energy situation and to increase army financing. - Turkey’s foreign trade deficit continued to contract in June, albeit at a slower-than-expected pace, according to figures announced by the Turkish Statistical Institute, the country’s trade deficit narrowed by 8.8 % to $7.85 billion.

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