Malaysia

Fitch Revises Malaysia's Outlook. Fitch Ratings has revised Malaysia's outlook to "negative" from "stable". Its long-term foreign and local currency issuer default ratings (IDRs) have been affirmed at "A-" and "A", respectively. The short-term foreign currency IDR has been affirmed at "F2" and the country ceiling at "A". Notwithstanding these weaknesses, Fitch acknowledges strengths in the composition of Malaysia's debt and in its funding base. Federal government debt is overwhelmingly denominated in local currency (97 % at end-2012) and has a smooth maturity profile. The rising role of non-resident investors points to growing exposure to global investor risk appetite, but Fitch views strengths in Malaysia's external finances as a buffer against  volatility.  The impact of heightened market tensions on Malaysia's government debt market since June has been mild compared with some regional and rated peers, so far. (Reuters)

Asia 

Japan Output Falls Most Since 2011 In June After May Surge. Japan’s industrial production fell in June by the most since March 2011, when the nation was hit by a record earthquake, as automakers cut output for a second month after a surge in April. Output declined 3.3 % from the previous month, the Trade Ministry said today in Tokyo, after climbing in May by the most since December 2011. Production slid 4.8 % from a year earlier in June. The jobless rate was 3.9 %, the lowest since 2008, a separate report showed. (Bloomberg)

China Banks Get US$2.8b Liquidity Injection. China's central bank said it had injected 17 billion yuan, or US$2.8 billion (RM9.04 billion), into the domestic banking system yesterday after a liquidity squeeze rocked financial markets in the world's second-largest economy last month. The People's Bank of China injected the cash into the domestic interbank market by offering seven-day reverse repurchase agreements, it said. It was the first such move since February. (AFP)

India Central Bank Holds Rates In Push To Stem Rupee Plunge. India’s central bank left interest rates unchanged and said increases in borrowing costs earlier this month to stem the rupee’s slide will be reversed in a measured way as  the currency stabilizes. Governor Duvvuri Subbarao kept the benchmark repurchase rate at 7.25 %, the Reserve Bank of India said today. All except one of 32 analysts in a Bloomberg News survey predicted the decision, with one expecting a cut to 7 %. The review is the last scheduled before Subbarao’s term ends in September. (Bloomberg)

USA

Obama Offers 'Grand Bargain' On Corporate Tax Rate, Infrastructure. President Barack Obama proposed a "grand bargain for middle-class jobs" on Tuesday that would cut the U.S. corporate tax rate and use billions of dollars in revenues generated by a business tax overhaul to fund projects aimed at creating jobs. The goal was to break through partisan gridlock in Congress with a formula that satisfies Republicans and Democrats alike. But there was no sign that congressional Republicans - who have fought nearly every facet of Obama's domestic agenda - would look favorably upon the president's proposal. The president's plan combined a proposed corporate tax rate cut - desired by Republicans - with new spending on infrastructure projects like roads and bridges as well as education investment - desired by his fellow Democrats. (Reuters)

Consumer Confidence Index In U.S. Fell To 80.3 In July. Confidence among U.S. consumers declined in July from a five-year high as higher borrowing costs and gasoline prices tempered Americans’ outlook for the economy, even as their  assessment of current conditions improved. The Conference Board’s index decreased to 80.3, the second-highest level since January 2008, from a revised 82.1 the prior month, the New York-based private research group said today. The median forecast in a Bloomberg survey of economists called for a reading of 81.3. Another report showed home prices rose in May by the most in more than seven years. (Bloomberg)

Home Prices In U.S. Increased By Most Since 2006 In May. Home prices rose in May by the most in more than seven years as the recovery in U.S. residential real estate gained momentum. The S&P/Case-Shiller index of property values climbed 12.2 % from May 2012, the biggest 12-month gain since March 2006, after advancing 12.1 % a month earlier, a report showed today in New York. The median projection of 31 economists surveyed by Bloomberg called for a 12.4 % advance. (Reuters)

Europe

Euro-Area Economic Confidence Jumps To Highest In 15 Months. Economic confidence in the euro area improved for a third month  in July, reaching the highest in 15 months and adding to indications the 17-nation currency bloc is emerging from a record-long recession. An index of executive and consumer sentiment rose to 92.5 from 91.3 in June, the European Commission in Brussels said today. That is the highest reading since April 2012 and matched the median estimate in a Bloomberg News survey of 31 economists. (Bloomberg)

German Inflation Unexpectedly Remained Unchanged In July. German inflation unexpectedly remained unchanged in July at the highest level in five months. Germany’s consumer price index, calculated using a harmonized European Union method, rose 1.9 % from a year ago, the Federal Statistics Office in Wiesbaden said today.  That exceeds economists’ forecasts for a slowdown to 1.8 %, according to the median of 24 estimates in a Bloomberg News survey. Prices increased 0.4 % from June. (Bloomberg)

Source: Kenanga