Malaysia

Moody's Keeps 'Stable' Outlook On Malaysia. Moody's Investors Service has kept its "stable" outlook on Malaysia's sovereign rating but may revise upward if the country makes economic reforms. Accordingly, Moody reaffirmed its "A3" rating on Malaysia's government bonds as the country balances its healthy growth outlook and formidable foreign exchange reserve buffer against its susceptibility to external demand. Moody's assessment on Malaysia is in contrast to its peer, Fitch Ratings, which recently lowered its outlook on the country to "negative". Moody's said  the implementation of counter-cyclical measures in  the wake of the global financial crisis had worsened fiscal and debt ratios. The situation has yet to recover to pre-crisis levels. "Nevertheless, funding conditions have not been adversely affected, while Malaysia government's debt profile remains favourable compared to peers," it said in a statement yesterday. (Business Times) 

Asia

Japan's Foreign Bond Binge Hits Three-Year High. Weekly purchases of foreign bonds by Japanese investors surged to a three-year high last week, as low domestic rates encouraged local institutions to search for higher returns overseas. Domestic investors, such as banks, pension funds and insurers, bought 1614.8 billion yen ($16.45 billion) in overseas debt during the week that ended August 10, following $690.3 billion in purchases a week earlier, according to weekly data from the Ministry of Finance. They have remained net buyers of foreign bonds for six consecutive weeks. (CNBC)

China’s Treasury Holdings Fall Amid Fed Talk On Taper. Holdings of Treasuries in China, the largest foreign lender to the U.S., fell in June for the first time in five months amid discussion by Federal Reserve officials about slowing the  pace their bond purchases. China’s stake dropped by $21.5 billion in June, or 1.7 %, to $1.276 trillion, according to Treasury Department data released yesterday. Yields climbed after June 19 when Fed Chairman Ben  S. Bernanke said policy makers might reduce the size of their $85 billion a month in purchases of Treasuries and mortgage securities in coming months. (Bloomberg)

India Fighting Worst Crisis Since ’91 Seeks To Buoy Rupee. India increased efforts to stem the rupee’s plunge and stop capital outflows that are pushing the economy toward its biggest crisis in more than two decades. The Reserve  Bank of India, whose Governor Duvvuri Subbarao steps down next month, cut the amount local companies can invest overseas without seeking approval to 100 % of their net worth, from 400 %, according to a statement late yesterday. Residents can remit $75,000 a year versus the previous $200,000 limit. Rupee forwards rose for the first time this week. (Bloomberg)

Indonesia Raises Reserve Ratio To Aid Rupiah As Rate Held. Indonesia ordered lenders to set aside more funds in government and central bank bonds as slowing growth deterred policy makers from raising the key interest rate for a third meeting to support the currency. The central bank boosted its secondary reserve requirement, comprising a combination of government bonds and Bank Indonesia certificates, to 4 % from 2.5 %, it said in Jakarta today. The benchmark reference rate was held at 6.5 %, as predicted by 16 of 25 economists surveyed by Bloomberg News, with the rest forecasting an increase. (Bloomberg)

USA

Jobless Claims In U.S. Decline To Lowest Level Since 2007. Employers fired the fewest workers last week since before the recession began almost six years ago, raising expectations that bigger job gains will soon give U.S. consumers the ability to boost spending. The number of claims for jobless benefits dropped by 15,000 to 320,000 in the week ended Aug. 10, the least since October 2007, according to Labor Department data today in Washington. Other figures showed consumer confidence hovered near a five-year high last week, builder sentiment jumped this month to the highest level since 2005 and manufacturing is struggling to gain traction following a slowdown earlier this year. (Bloomberg)

Consumer Prices In U.S. Increase, Supporting Fed Forecast. The cost of living in the U.S. rose in July for a third month, supporting the Federal Reserve’s forecast that inflation will move closer to its target. The consumer-price index increased 0.2 % after a 0.5 % gain in June, Labor Department figures showed today in Washington. The advance matched the median forecast of 82 economists surveyed by Bloomberg. The core measure, which excludes food and fuel, also climbed 0.2 % from June. (Bloomberg)

US Industry Output Steady As Manufacturing Dips Slightly. Output at U.S. factories declined slightly in July, reflecting a drop in auto production. The decline was expected to be temporary given the banner sales year automakers are having. The Federal Reserve says manufacturing output edged down 0.1 % in July compared with June. It was the first drop since declines in March and April. July's weakness reflected a 1.7 % drop in production of motor vehicles and parts. That decline should be reversed in coming months as automakers ramp up production for the new model year. Overall industrial production, which includes factories, mines and utilities, was flat in July after a 0.2 % rise in June. A sharp 2.1 % surge in mining was offset by a 2.1 % drop in utility output. (AP)

Consumer Comfort In U.S. Declines From More Than Five-Year High. Consumer confidence cooled last week from its highest level in more than five years as Americans’ views on the economy, personal finances and spending receded. The Bloomberg Consumer Comfort Index fell to minus 26.6 for the period ended Aug. 11, its first drop in four weeks. The reading was the second-strongest since January 2008, behind the prior week’s minus 23.5. (Bloomberg)

Homebuilder Confidence In U.S. Jumps To Highest Level Since 2005. Confidence among U.S. homebuilders rose in August to the highest level since 2005 as demand for new homes supports the market amid rising mortgage rates. The National Association of Home Builders/Wells Fargo index of builder confidence climbed to 59 from a revised 56 in July, which was lower than previously reported, the Washington-based group reported today. The median forecast in a Bloomberg survey of economists called for the gauge to be 57. Readings above 50 mean more builders view conditions as good than poor. (Bloomberg)

U.S. Net Outflow Of Long-Term Securities Increased In June. Foreign selling of U.S. long-term portfolio assets rose for a second straight month in June as investors abroad sold equities and a record amount of Treasury notes and bonds, a government report showed. The net long-term portfolio investment outflow was $66.9 billion after a $27 billion net decline in May, the Treasury Department said in a statement today in Washington. Net selling of long-term Treasuries by private foreign investors increased to $40.1 billion from $29 billion the prior month, the department said. (Bloomberg)

Europe

UK: Hot Weather Boosts July Retail Sales. Retail sales in the UK jumped by 1.1% in July from the previous month, boosted by hot weather and adding to hopes of a sustained economic recovery. The rise, reported by the Office for National Statistics (ONS), was significantly larger than expected. It means sales are up 3% compared with last year - the fastest annual rise since January 2011. The retail industry is seen as an indicator of the wider economy and the strength of consumer spending. The ONS figures are based on a survey of 5,000 retailers around the UK. Economists said rising sales were a sign of improved sentiment among consumers. (BBC)

Currencies

U.S. Dollar Seesaws On Fed Speculation. The U.S. dollar swung wildly Thursday as investors sorted through mixed data, speculating on the future of the Federal Reserve’s bond-buying program. The ICE dollar index, which tracks the unit against six major rivals, fell to 81.163 in recent trade from 81.710 late Wednesday in North America. Meanwhile, the euro rose to $1.3345 from Wednesday’s $1.3257. The British pound rose to $1.5638 from $1.5509, rising above $1.56 for the first time since mid-June, according to FactSet. The dollar fell to ¥97.39 in recent trade from ¥98.02 late Wednesday. The Australian dollar edged lower to 91.37 U.S. cents from 91.40 cents. (Market Watch) 

Commodities

Brent Prices Climb Towards $111 As Egypt Unrest Stokes Supply Fears. Brent crude prices climbed towards $111 per barrel on Thursday, extending gains from the previous session on a drop in U.S. oil inventories and worries over supplies from the Middle East and North Africa. Front-month September Brent, which expires on Thursday, was up 37 cents at $110.57 a barrel at 0114 GMT, while U.S. oil rose 25 cents to $107.09. (Reuters)

Gold Drops As U.S. Data Boosts Dollar, Treasury Yields. Gold fell 1.1 % on Thursday, back from a three-week high hit earlier, as the dollar rose and U.S. Treasury yields hit two-year highs after strong U.S. data bolstered the case for cut in the Fed's economic stimulus programme. Spot gold fell as much as 1.1 % to a session low of $1,318.81 an ounce after the data and stood down 0.7 % to $1,325.49 by 1328 GMT. Silver followed gold's downtrend, falling 0.2 % to $21.78 an ounce. Platinum rose to its highest in more than two months, and was last trading up 0.1 % to $1,500.99  an ounce, while  palladium hit its highest since late July at $745.97 an ounce. (Reuters)