Asia Pacific

China’s Treasury Holdings Approach Record After Taper Delay. China, the largest foreign creditor to the U.S., increased its ownership of Treasuries in October to almost the record level reached in July 2011 after the Federal Reserve unexpectedly opted not to slow bond buying. Holdings rose $10.7 billion, or 0.8 %, to $1.304 trillion, according to Treasury Department data released yesterday. China held a record $1.314 trillion in July 2011. Total foreign holdings of Treasuries rose $600 million, or 0.01 %, in October to $5.65 trillion. (Bloomberg)

Australia: Budget Deficit May Last A Decade. Australia's budget deficit may last for a decade if urgent "remedial action" is not taken to improve the country's finances, its government has warned. In its latest economic outlook, the deficit was forecast to rise to 47bn Australian dollars ($42bn) in the year to June as a result of a weakening economy. That compares with a forecast for a A$30bn deficit made in August. The country's 2014-2015 growth forecast was also downgraded to 2.5% from 3%. (BBC)

USA

Consumer Prices Steady As Fed Weighs QE Taper. The U.S. cost of living was unchanged in November, showing it will take time for inflation to approach the level desired by Federal Reserve officials, who begin their policy meeting today. Cheaper gasoline, new cars and clothing held the consumer-price index in check after a 0.1 % drop the prior month, according to data today from the Labor Department in Washington. The median forecast in a Bloomberg survey of economists called for a 0.1% gain. Prices rose 1.2 % in the 12 months to November after a 1 % year-over-year advance in October. (Bloomberg)

US Senate Sends Budget Deal Over Crucial Hurdle. A budget bill has passed a US Senate procedural vote, all but guaranteeing its approval this week and lowering the threat of a fresh government shutdown. In a rare show of cross-party spirit, 12 Republicans joined Democrats to pass the measure 67-33, paving the way for a majority vote later this week. The two-year budget bill was overwhelmingly approved last week by the US House of Representatives. President Barack Obama has also backed the budget proposal. (BBC)

Europe

UK Inflation Rate Falls To Four-Year Low In November. The UK's inflation rate, as measured by the consumer prices index, fell to a four-year low of 2.1% in November, down from 2.2% the month before. The Office for National Statistics said the change was caused by slower increases in food and energy prices. The ONS said this was because the impact of recently announced rises in energy prices were yet to take effect. Inflation as measured by the retail prices index (RPI) remained unchanged at 2.6%. (BBC)

Russia Reaches Deal With Ukraine On $15 Billion Bailout. Russia threw Ukraine an economic lifeline on Tuesday, agreeing to buy $15 billion of Ukrainian debt and to reduce the price its cash-strapped neighbor pays for vital Russian gas supplies by about one-third. The deal, reached at talks in Moscow between the Russian and Ukrainian leaders, is intended to help Ukraine stave off economic crisis though Moscow will hope it keeps Kiev in its political and economic orbit. The agreement could also fuel protests in Kiev against Ukrainian President Viktor Yanukovich, who faces accusations of "selling" Ukraine to the highest bidder after spurning a trade deal with the European Union and turning to Moscow for help.(Reuters)

Currencies

Dollar Mixed As Fed Meeting Begins. The U.S. dollar fell against the yen but rose against the pound on Tuesday as the Federal Reserve kicked off its two-day policy meeting. The ICE dollar index, a gauge of the greenback’s strength against six rivals, traded at 80.060 versus 80.074 late Monday. The dollar fell to ¥102.67 from ¥103 late Monday. The British pound fell to $1.6265 from $1.6304 late Monday. The euro sat at $1.3765 versus $1.3764 late Monday. Meanwhile, the Australian dollar declined to 88.95 U.S. cents from 89.42 U.S. cents late Monday. (Market Watch)

Commodities

Oil Slips As Fed News Awaited, Brent-WTI Spread Narrows. Brent oil fell by nearly $1 on Tuesday, pressured by the spectre of the U.S. Federal Reserve tapering its monetary stimulus program. U.S. oil also ended lower, but not by as much, tightening the spread between the two benchmarks. Brent futures for February settled 97 cents lower at $108.44. U.S. crude oil futures settled 26 cents lower at $97.22, after trading as high as $97.90. Brent's premium to U.S. oil tightened by more than $2 per barrel to $10.97. (Reuters)

Gold Drops 1 Pct On Speculation Over Fed Tapering. Gold fell around 1 % on Tuesday as investors shed some bullish bets on expectations that the U.S. Federal Reserve may be poised to trim its bullion-friendly economic stimulus. Spot gold was down 0.9 % at $1,228.54 an ounce by 1:52 p.m. EST (1852 GMT). Silver dipped 0.5 % to $19.84 an ounce, while platinum fell 1 % to $1,344.24 an ounce and palladium dropped 2.1 % to $698.97 an ounce. (Reuters)