Malaysia

Inflation Continues To Taper Off, Recording A 3.2% YoY growth following a 3.4% rise in April. The market had estimated a rise of 3.3%. This is mainly due to lower food prices as well as the core inflation (minus food and beverage), which expanded at a slower pace of 3.1%. For the first five months of the year, CPI averaged at 3.4%, compared to 1.6% seen in the same period in 2013. On a monthly comparison, inflation rose by a minute 0.1% MoM. (Please refer to Economic Viewpoint for further comments)

Asia Pacific

Sentiment Falls But Korean Firms Mildly Upbeat On Outlook. A survey of South Korean manufacturers showed business sentiment for the third quarter of the year fell from an over three-year high in the previous survey, but they remained mildly optimistic about the outlook for Asia’s fourth-largest economy. The business survey index (BSI) fell to 103 for the coming July to September quarter, compared with 111 in the previous survey, the Korea Chamber of Commerce and Industry (KCCI) said in a statement. An index reading above 100 indicates the number of manufacturers who see improvement in business conditions in the coming quarter outnumber those who forecast deterioration. The reading for the second quarter survey was the highest since the first quarter of 2011 when it hit the same level. (Reuters)

China Beige Book Shows Economy Slowing On Investment. China’s economic slowdown deepened this quarter, as capital spending showed weakness and fewer companies applied for credit, a private survey showed. Half of businesses reported higher investment, the smallest proportion and the sharpest drop since the survey began 10 quarters ago, according to the China Beige Book, a report published quarterly by New York-based China Beige Book International. The slowdown hurt hiring and wages, and interest rates offered by shadow lenders fell below levels offered by banks, it said. (Bloomberg)

Australia Seeks Stronger Ties With Indonesia. AN Australian business mission, focused on generating more export sales within Southeast Asia, concluded on Friday after a stint here, with agricultural trade at the forefront of discussions. The mission, led by the State of Victoria’s Minister for Employment and Trade Louise Asher and the state’s Agriculture and Food Security Minister Peter Walsh included more than 180 delegates representing more than 130 Victorian companies. Walsh said the aim of the mission, the second after a visit last year, was to boost trade, attract investment and improve Victorians’ understanding of Southeast Asia’s diversity through deeper government, business, cultural and personal connections between Victoria and the region. The mission — expected to build on the work of the first South East Asia Super Trade Mission last year, which is estimated to have netted Australia additional export sales of more than US$230 million — also brought delegates from several fields outside of agriculture including education, sustainable urban development and tourism. (NST)

USA

Obama Says Hopes For Pacific Trade Pact In November. Pacific trading partners hope to have a free trade agreement ready to present to the public and stakeholders in November, U.S. President Barack Obama said on Friday. He said the aim was to have a document to discuss with other leaders of Trans-Pacific Partnership nations when he travels to Asia in November, a trip that will include the Group of 20 leaders meeting in Australia on November 15-16. Asia Pacific Economic Cooperation (APEC) leaders also meet that month. The United States holds mid-term elections on Nov. 4, and many trade experts had despaired of finalizing the TPP this year because of the risk that it could cost Obama's Democrats votes at the poll, given the party's links to trade unions worried about the impact of trade agreements on jobs. (Reuters)

Europe

Draghi: QE Part Of Toolkit, But Focus On Current Stimulus. European Central Bank President Mario Draghi said largescale asset purchases are part of the central bank's toolkit, but for now it would focus on its latest set of stimulus measures. Draghi told Dutch newspaper De Telegraaf in an interview published on Saturday that the euro zone recovery was still weak, uneven and vulnerable and that interest rates would stay low over a longer period. Asked what needed to happen before the ECB would start buying assets to give banks more money to lend, also known as quantitative easing, Draghi said "that would be the answer to a deterioration of inflation expectations over the medium term." "At the moment, however, we are focusing on the measures announced on 5 June," Draghi was quoted as saying. (Reuters)

China And Greece Sign Deals Worth $5bn During Li Visit. China and Greece have signed business deals worth about $5bn during Chinese Premier Li Keqiang's visit. Deals signed covered areas including exports and shipbuilding. China also showed an interest in buying railways and building an airport in Crete. China is eager to take a majority stake in the Piraeus port. A Chinese company already runs two piers at the port. Greece is keen to attract foreign investment to reduce its national debt and high unemployment rate. (BBC)

Spanish Bonds Drop A 2nd Week On Bets ECB Rates Spur Is Waning. Spain’s government bonds fell for a second week as investors bet a rally after the European Central Bank introduced new stimulus was overdone and as the nation extended a run of debt sales. The extra yield investors get to hold Spanish bonds instead of German bunds widened to the most since June 6, the day after ECB President Mario Draghi unveiled a package of measures that drove yields across the region down to records. German two-year note yields touched the lowest in more than a year as a gauge of overnight borrowing costs in euros fell to a record. Italy’s bonds slid as the nation sold securities in an exchange auction. Spain’s 10-year yield rose seven basis points, or 0.07 %age point, in the week to 2.73 % at 5 p.m. London time yesterday. The 3.8 % bond due in April 2024 dropped 0.645, or 6.45 euros per 1,000-euro ($1,359) face amount, to 109.17. The yield spread with bunds rose to as much as 1.42 %age points. (Bloomberg)

Currencies

Dollar Posts Weekly Loss On Low-Rates Prospect. The dollar rebounded Friday, but posted weekly losses against most major rivals after the Fed signaled this week it was likely to keep interest rates low for a while. The ICE dollar index, a measure of the greenback’s strength against six other currencies, rose to 80.407 from 80.327 late Thursday. The pound fell to $1.7007 from $1.7038 late Thursday. In other action, the euro fell to $1.3586 from $1.3604, but posted a 0.35% weekly gain. The dollar rose to ¥102.13 from ¥101.96 late Thursday, on track to eke out a weekly gain of 0.1%. (Market Watch)

Commodities

U.S. Crude Hits Nine-Month High Above $107 On Short-Covering. U.S. crude oil jumped above $107 a barrel on Friday, reaching a new nine-month high on short-covering ahead of the July contract expiry, while Brent dropped on profit-taking as concerns eased over supply disruptions due to violence in Iraq. Brent crude slipped 25 cents to settle at $114.81 a barrel. It had reached $115.71 on Thursday, its highest intraday price since Sept. 9, 2013. U.S. crude rose 83 cents to settle at $107.26 a barrel, the highest settlement since Sept. 18. (Reuters)

Gold Drops As S&P Rises But Posts Big Weekly Gain. Gold fell on Friday as a record high in the S&P equities index and a higher dollar prompted bullion investors to take profits, a day after the metal's biggest rise in nine months on fresh bullish bets and short covering. Spot gold dropped 0.4 % to $1,314.45 an ounce by 3:22 p.m. Silver climbed 0.6 % to $20.83 an ounce. Among platinum group metals, platinum fell 1.1 % to $1,451.25 an ounce, after rising almost 2 % in the previous session. Palladium dropped 1.8 % to $819 an ounce. (Reuters)