Malaysia

Inflation In November Increased By 2.9% annually on higher food prices and continued adjustment to an increase in fuel prices. This falls in line with our estimates as well as consensus’. On a monthly comparison, the CPI rate increased by 0.3% MoM. Inflation averaged at 2.0% year-to-date compared to 1.7% seen in the same period in 2012. The core inflation (minus food and beverages) rose by 2.5% YoY, following a 2.3% increase in October, the highest rise since September 2011. On a monthly comparison, core prices went up by 0.3% MoM and the year-to-date saw it averaging at 1.3% compared to 1.2% in the previous year. (Please refer to Economic Viewpoint for further comments)

New Interest Rate Framework Soon. Move to ensure base lending rate remains relevant. BANK Negara Malaysia will unveil a new framework for the country's base lending rate (BLR) soon. BLR is the base interest rate that banks refer to internally before deciding how much to charge for loans extended to their customers. Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said it would issue a consultative paper outlining the new reference rate framework to the industry in early January. The current framework needs to be tweaked to ensure the BLR remains relevant albeit the highly dynamic environment, she said. (Business Times)

Asia Pacific

Asia Business Sentiment Falls In Q4. Business sentiment among Asia's top companies dropped sharply in the fourth quarter, extending last quarter's declines, with global economic uncertainty and rising costs weighing on the region's firms, a ThomsonReuters/INSEAD survey showed. The ThomsonReuters/INSEAD Asia Business Sentiment Index fell to 62 in the fourth quarter from 66 in the third quarter of 2013, the lowest reading since the third quarter of 2012. A reading above 50 indicates an overall positive outlook. (Reuters)

Japan Posts Record Trade Deficit For Nov. Japan posted a record November trade deficit, data showed yesterday, underscoring how soaring energy bills have weighed on the country’s trade balance despite a jump in exports. Government figures showed a 35.1 % year-on-year rise to a 1.29 trillion yen deficit, the worst result for November and the 17th straight month of shortfall — the longest stretch since comparable data began more than three decades ago. (AFP)

Foreign Investment In China Up 5.48% In First 11 Months. Foreign investment into China rose 5.48% year-on-year in the first 11 months of 2013, the government said Wednesday. Foreign direct investment (FDI), which excludes financial sectors, totalled US$105.5bil for January-November, the ministry of commerce announced. For November alone FDI increased 2.35% to US$8.48bil, the ministry said. (AFP)

China Home Prices Rose In November As Shenzhen Led Gains. New home prices in the four Chinese cities defined as first-tier by the government rose, with Shenzhen posting the biggest gain in almost three years, as property measures by local governments failed to deter buyers. Shenzhen and Guangzhou posted increases of 21 % from a year earlier, while prices climbed 18 % in Shanghai and 16 % in Beijing, data from the National Bureau of Statistics showed today. Prices rose from a year earlier in 69 of 70 cities tracked by the government last month, it showed. (Bloomberg)

N.Z. Economic Growth Accelerates To Fastest In Four Years. New Zealand’s economic growth accelerated to the fastest pace in almost four years in the third quarter, strengthening the case for the Reserve Bank to start raising interest rates next year. Gross domestic product increased 1.4 % from the second quarter, when it rose a revised 0.3 %, Statistics New Zealand said in Wellington today. That’s the biggest gain since the final quarter of 2009 and better than the 1.1 % median forecast of economists in a Bloomberg survey. From a year ago, the economy grew 3.5 %, the most in six years. (Bloomberg)

USA

Fed Trims QE Pace To $75 Billion On Labor Market Outlook. The Federal Reserve is trimming its monthly bond purchases to $75 billion from $85 billion, taking the first step toward unwinding the unprecedented stimulus that Chairman Ben S. Bernanke put in place to help the economy recover from the worst recession since the 1930s. “Reflecting cumulative progress and an improved outlook for the job market, the committee decided today to modestly reduce the monthly pace at which it is adding to the longer-term securities on its balance sheet,” Bernanke said at a press conference in Washington today after a meeting of the Federal Open Market Committee. (Bloomberg)

Budget Deal Easing $63 Billion In Cuts Advances In Senate. The U.S. Senate cleared and sent to President Barack Obama the first bipartisan budget produced by a divided Congress in 27 years, resolving for now spending issues that had helped spur a government shutdown in October. The $1.01 trillion budget deal passed 64-36 today eases $63 billion in automatic spending cuts, raises user fees and lowers the U.S. deficit over 10 years. The plan keeps in place about half of the reductions known as sequestration for next year, and about three-quarters of the planned cuts for 2015. (Bloomberg)

U.S. Housing Starts Jump To Highest Level In Five Years. Builders broke ground on more homes in November than at any time in over five years as growing demand helped the industry overcome rising U.S. mortgage rates. Housing starts jumped 22.7 % to a 1.09 million annualized rate, exceeding all forecasts of economists surveyed by Bloomberg and the most since February 2008, data from the Commerce Department showed today in Washington. Permits for future projects held near a five-year high, indicating the pickup will be sustained into 2014. (Bloomberg)

Europe

German Business Confidence Rises To Strongest In 20 Month. German business confidence rose to the strongest in 20 months in a signal that the pace of recovery is quickening in Europe’s largest economy. The Ifo institute’s business climate index, based on a survey of 7,000 executives, increased to 109.5 in December from 109.3 in November. That matches the median prediction of 39 estimates in a Bloomberg News survey and is the highest level since April 2012. (Bloomberg)

UK Unemployment Rate At Lowest Since 2009. The UK unemployment rate has fallen to its lowest level since 2009, official figures show. At 7.4%, this is the lowest rate since the February-to-April period in 2009, the Office for National Statistics (ONS) said. The number of people out of work fell by 99,000 to 2.39 million in the three months to October, the ONS said. Prime Minister David Cameron told MPs the figures showed that "the plan is working". (BBC)

Currencies

Dollar Jumps To 2013 High Against Yen On Fed Taper. The U.S. dollar surged above 104 yen Wednesday after the Federal Reserve said it would slow the rate of its monetary stimulus by $10 billion starting in January. The dollar jumped to ¥104.30, its highest level against the yen in 2013, from ¥102.67 late Tuesday. The ICE dollar index , which compares the U.S. unit with six rivals, rose to 80.477 from 80.060 late Tuesday. The British pound surged to $1.6398 from $1.6265, paring some of its gains against the greenback after the Fed decision. Meanwhile, the euro fell to $1.3693 from $1.3765 late Tuesday. The Australian dollar dropped to 88.58 U.S. cents from 88.95 U.S. cents late Tuesday. (Market Watch)

Commodities

Brent Climbs More Than $1; Shrugs Off Fed Taper Announcement. Brent crude oil futures on Wednesday shrugged off the U.S. Federal Reserve's decision to begin tapering its stimulus program, maintaining gains that widened its premium to U.S. crude. Brent crude rose $1.19 to settle at $109.63, after settling nearly $1 lower on Tuesday. U.S. oil rose 58 cents to close at $97.80, after earlier rising 79 cents to a high of $98.01 on strong housing data from the U.S. (Reuters)

Gold Drops In Volatile Trade After Fed Says To Cut Stimulus. Gold fell about 1 % in choppy trade on Wednesday, after the U.S. Federal Reserve lowered its inflation forecast and signalled better prospects for the economy as it announced plans to trim its bond-buying stimulus. Spot gold was down 0.8 % at $1,219.21 an ounce by 4:15 p.m. EST (2115 GMT). Among other precious metals, silver was down 0.4 % at $19.79 an ounce. Platinum fell 0.8 % to $1,334.74 an ounce, while palladium was down 0.2 % to $695.97 an ounce. (Reuters)