Global

IMF Warns G-20 Of Deflation Risk, Emerging-Market Turmoil. Risks of prolonged market turmoil in emerging markets and of deflation in the euro area are threatening the world’s improved economic prospects, according to the International Monetary Fund. The IMF, in a staff report prepared for central bankers and finance ministers from the Group of 20, said the recovery is still weak and “significant downside risks remain.” A January global growth forecast of 3.7% for this year, from 3 % in 2013, hinges on recent market volatility from Turkey to Brazil being short-lived, according to the report. “Capital outflows, higher interest rates, and sharp currency depreciation in emerging economies remain a key concern,” according to the report prepared ahead of the G-20 Feb. 22-23 meeting in Sydney. “A new risk stems from very low inflation in the euro area, where long-term inflation expectations might drift down, raising deflation risks in the event of a serious adverse shock to activity.” (Bloomberg)

Malaysia

Inflation For The First Month Of 2014 Edged Up By 3.4% YoY, as a result of an increase in the electricity tariff alongside higher food prices amidst the New Year season. This is slightly higher than consensus and our own estimate for a 3.3% increase. Compared to the previous month, the CPI rate rose by 0.6% MoM. The core inflation (minus food and beverages) increased by 3.0% YoY and 0.4% MoM. (Please refer to Economic Viewpoint for further comments)

Malaysia's Vehicle Sales Down 8.7% In January. Malaysia recorded an 8.7% decline in total vehicle sales to 50,273 units in January from 55,066 vehicles a year ago but the Malaysian Automotive Association (MAA) is expecting sales to be maintained at the same level in February. The trade body said on Wednesday that of the 50,273 units sold in January, 44,702 of them were passenger vehicles and the rest were 5,571 commercial vehicles. The MAA said the sales volume in January was also lower than December 2013 by 17%. "Heavy discounting by car companies given out in December 2013 resulted in many booking concluded in December 2013 itself," it said. (The Star)

Asia

China Cuts Treasury Holdings Most Since 2011 Amid Taper. China, the largest foreign U.S. creditor, reduced holdings of U.S. Treasury debt in December by the most in two years as the Federal Reserve announced plans to slow asset purchases. The nation pared its position in U.S. government bonds by $47.8 billion, or 3.6 %, to $1.27 trillion, the largest decline since December 2011, according to U.S. Treasury Department data released yesterday. At the same time, international investors increased holdings by 1.4 %, or by $78 billion, in December, pushing foreign holdings to a record $5.79 trillion. (Bloomberg)

USA

Federal Reserve Commits To Stimulus Slowdown In Minutes. The US Federal Reserve intends to continue reducing economic stimulus measures, minutes of the central bank's January meeting have confirmed. The Fed's policy makers said they expected to cut monthly bond-buying in predictable $10bn steps. The Fed cut its bond-buying programme to $65bn a month at the end of its most recent meeting in January. That came despite a string of disappointing US economic data, including weak jobs figures. (BBC)

Housing In U.S. Cools As Weather Adds To Burdens. Housing starts in the U.S. slumped in January by the most in almost three years as unusually harsh winter weather added to the industry’s burdens. Builders began work on 880,000 homes at an annualized rate last month, matching the lowest projection in a Bloomberg survey of economists and down 16% from December, according to data from the Commerce Department issued today in Washington. The decrease was the biggest since February 2011. Another report showed wholesale prices remained constrained. (Bloomberg)

Europe

Greece Posts First Current Account Surplus Since 1948. Record spending by tourists has helped Greece post its first current account surplus since official data began. Figures from the Bank of Greece showed the difference between the money going into and coming out of the country was 1.24bn euros last year. It was partly driven by a 15% increase in tourism receipts, the country's biggest earner. The surplus was the first for the recession-hit economy since records began in 1948. It is equivalent to about 0.7% of total Greek economic output, and is a marked improvement on 2012, when the current account registered a deficit of 4.6bn euros. (BBC)

UK Unemployment Falls By 125,000 To 2.34 Million. The number of people out of work in the UK fell by 125,000 to 2.34 million in the three months to December, according to the latest estimates. The unemployment rate now stands at 7.2%, but the Office for National Statistics said the improvement in the labour market could be slowing. Meanwhile, more women are in work than at any time since records began, at just over 14 million. Average earnings have also increased, by 1.1% in the year to December. (BBC)

Currencies

Dollar Edges Up After Fed Minutes; Pound Falls. The U.S. dollar swung higher against many of its rivals Wednesday after the Federal Reserve released the minutes from its last policy meeting, which showed widespread dissent about the path forward on policy normalization. The ICE dollar index, which tracks the greenback against six other currencies, rose to 80.191 from 80.017 late Tuesday. The U.S. dollar bought ¥102.32, down slightly from ¥102.39 late Tuesday. The British pound fell to $1.6681 from $1.6725. The euro fell versus the dollar to $1.3733 from $1.3758 late Tuesday. Elsewhere, the Australian dollar saw little movement versus the dollar, trading at 90.04 U.S. cents from 90.26 U.S. cents late Tuesday. (Market Watch)

Commodities

U.S. Crude Hits 4-Month High As Cold Fuels Diesel Demand. U.S. crude oil and heating oil prices rose on Wednesday as forecasts for another cold snap next week is expected to increase demand. Boosted by heating oil, U.S. crude settled 88 cents higher at $103.31 a barrel. Brent crude rose just 1 cent to end the day at $110.47 a barrel, reversing a rally on Tuesday in which it rose to its highest level this year. (Reuters)

Gold Falls Nearly 1 % After Fed Minutes. Gold fell almost 1% on Wednesday after minutes of the Federal Reserve's latest policy meeting showed several policymakers wanted to keep cutting monetary stimulus, weighing down on bullion's inflation-hedge appeal. Spot gold was down 0.8 % to $1,310.50 an ounce by 3:33 p.m. (2033 GMT). Among other precious metals, silver fell 2.1 % to $21.43 an ounce. Platinum fell 0.6 % to $1,410.75 an ounce, while palladium edged down 0.4 % to $730.75 an ounce. (Reuters)