Malaysia

BNM Kept OPR At 3.25%. The BNM Monetary Policy Committee (MPC) has decided to keep the Overnight Policy Rate at 3.25% following a 25 bps raise in the previous meeting. Though their outlook of the global economy remains somewhat moderate, key economies such as the USA has been showing signs of continued economic improvement, to the advantage of Malaysia’s export sectors, though the pace is expected to be more moderate on account of a higher base effect. They did however note that domestic consumption is expected to remain modest moving forward. For now, the current OPR rate is supportive of the economy but they did mention “further adjustment to the degree of monetary accommodation may be taken” which we believe is a sign that another 25 bps hike is in the making. (Please refer to Economic Viewpoint for further comments)

Vehicles Sales Rev Up In August. Positive consumer sentiment drove vehicle sales higher in August with 51,125 units sold versus 51,106 units sold in the same month last year. The Malaysian Automotive Association (MAA) said in a statement yesterday between January and August, sales rose by 2.7% to 444,534 units compared with 433,025 units in the same period last year. MAA attributed the healthy sales growth to positive consumer sentiment. (NST)

Asia Pacific

Abenomics Spurs Record Wealth In Solace For Price Rises. Japan’s household assets rose to a record, providing support for consumers as Prime Minister Shinzo Abe weighs another increase in the nation’s sales tax. Assets increased to 1,645 trillion yen ($15 trillion) at the end of June, up 2.7% from a year earlier, according to a quarterly Bank of Japan report released yesterday. Holdings in investment trusts climbed 15% to an all-time high of 82 trillion yen. (Bloomberg)

Japan Trade Deficit Narrows In August. Japan's trade deficit narrowed in August as a fall in imports lowered the country's energy bill for the month. The shortfall between imports and exports shrank to 948.5bn yen ($8.7bn;) 2.4% lower than in July. The country's imports fell by 1.5% in August from the year before, as the country bought less crude oil and liquefied natural gas. Japan's energy bill has been the main reason for its ballooning trade deficit since 2011. Japan has posted a trade deficit for the last 26 months. The trade data also showed a decline in exports in August, by 1.3% when compared to the previous year. That's a reverse from the near 4% year-on-year increase in exports in July. (BBC)

Japan Pension Funds Sell 1.1tril Yen Debt. Japan’s public pension funds, including the US$1.2 trillion (RM3.87 trillion) Government Pension Investment Fund, sold a net 1.1 trillion yen (RM32.7 billion) in long-term Japanese government debt in April-June, central bank data showed yesterday. Public pension funds also bought a net 393 billion yen in stocks, flow of funds data from the Bank of Japan showed. Under pressure from the government of Prime Minister Shinzo Abe to shift money into higher-risk assets and out of low-yielding Japanese government bonds, GPIF plans to boost the weighting of domestic stocks to more than 20% from a current 12% target, sources said. (Reuters)

China's House Prices Fall Further, Economic Gloom Deepens. Worries that China's economy may be slowing further intensified on Thursday as data showed home prices fell for the fourth straight month, adding to expectations that Beijing will need to do more to stimulate activity. Average new home prices across China fell 1.1% in August from July, accelerating from last month's 0.9% drop, according to a Reuters weighted home price index calculated from official figures. Price falls spread to a record number of cities, and further declines are expected as cash-hungry developers cut asking prices and offer bigger discounts to attract buyers. Some economists think the slide will persist well into next year, citing huge inventories of unsold homes. (Reuters)

China's Xi Jinping Signs Landmark Deals On India Visit. India and China have signed 12 agreements in Delhi, one of which will see China investing $20bn in India's infrastructure over five years. At a news conference with Chinese President Xi Jinping, India's PM Narendra Modi said "peace on the border" was important for progress. Talks came as India accused China of fresh territorial incursions in Ladakh. China is one of India's top trading partners but they vie for regional influence and dispute their border. (BBC)

South Korea To Sharply Boost Budget Spending To Spur Economy. South Korea's government will boost budget spending more than previously planned at least for the next three years to help the local economy better cope with a tepid global recovery and a continued slump in domestic demand. The annual government budget bill for next year and the medium-term fiscal management plans for the future, unveiled by the finance ministry, showed fiscal spending set to grow by an average of 4.7% each year for the 2015-2017 period. Next year, spending will increase 5.7% to 376.0 trillion won ($363.46bil), more than a 4.0% rise set for this year and a 3.5% gain marked under a previous medium-term fiscal management plan. (Reuters)

New Zealand Economy Slows In Second Quarter, Annual Rate Growth At Decade High. New Zealand's economy grew more slowly in the second quarter, suggesting the near decade-high annual rate is the peak of the current cycle, allowing the central bank to sit on the sidelines for an extended period. The economy grew a seasonally adjusted 0.7% in three months to June 30, taking the annual rate to 3.9%, the fastest since second quarter 2004, Statistics New Zealand figures showed on Thursday. The South Pacific economy has been a leader among developed economies over the past year, but the drive from a booming dairy industry, and a surging construction sector, showed signs of easing. (Reuters)

USA

Jobless Claims In U.S. Decline To Two-Month Low Of 280,000. The number of Americans filing applications for unemployment benefits plunged last week to a two-month low, a sign the labor market continues to strengthen. Jobless claims decreased by 36,000 to 280,000 in the period ended Sept. 13, the Labor Department said today in Washington. The median forecast of 52 economists surveyed by Bloomberg called for a decline to 305,000. Those already collecting unemployment benefits fell to a more than seven-year low. (Bloomberg)

U.S. Household Net Worth Rises To Record $81.5Tril. The net worth of Americans hit a record high in the second quarter as the stock market climbed, while household debt rose at its fastest pace since 2007 in a sign of growing confidence among U.S. consumers. Net worth nudged up 1.7% to $81.5 trillion, according to the so-called 'Flow of Funds' report released on Thursday by the Federal Reserve. The net worth of Americans hit a record high in the second quarter as the stock market climbed, while household debt rose at its fastest pace since 2007 in a sign of growing confidence among U.S. consumers. Net worth nudged up 1.7% to $81.5 trillion, according to the so-called 'Flow of Funds' report released on Thursday by the Federal Reserve. (Reuters)

Slump In U.S. Housing Starts Led By Multifamily. Housing starts slumped in August from the highest level in almost seven years, reflecting a setback in multifamily projects that are at the forefront of the rebound in U.S. real estate. Beginning home construction fell 14.4%, the most since April 2013, to a 956,000 annualized rate following July’s revised 1.12 million pace that was the strongest since November 2007, the Commerce Department said today in Washington. Work on apartments and condominiums, which tends to be volatile, dropped 31.7% after jumping 44.9% in July. (Bloomberg)

Europe

Irish Economy Sees Strong Growth. The Republic of Ireland's economy grew 1.5% in the second quarter of the year, figures show, and was up 7.7% on the April-to-June period in 2013. The official data prompted the government to upgrade growth forecasts for the second time in a week and to promise no new austerity measures. Last week, growth for 2014 was up-rated to 3% from 2.1%, but will now be around 4.5%, Ireland's finance minister said. Michael Noonan said the economy was in "a catch-up phase... after recession". (BBC)

Swiss Central Bank Ready To Act 'Immediately' As Deflation Risks Resurface. Switzerland's central bank vowed to vigorously defend a three-year-old cap on the Swiss franc which has come under pressure from a recent appreciation of the currency, but it stopped short of announcing concrete new measures for now. In a statement in which it warned of renewed risks of deflation and slower growth, the Swiss National Bank (SNB) said it stood ready to make unlimited currency interventions and would resort to additional steps "immediately" if needed to defend the 1.20 per euro cap. However the tougher rhetoric failed to weaken the Swiss franc, which rose to a one-week high after the announcement - a signal that the bank may ultimately be forced into further, costlier measures such as currency intervention or moving to negative interest rates. (Reuters)

IMF Cuts Italy Growth Outlook, Hikes Deficit, Debt. Italy's economy will shrink in 2014 for a third year running, while the public debt will continue to rise, the International Monetary Fund said on Thursday, calling on Matteo Renzi's government to follow through on promised reforms. Gross domestic product will fall this year by 0.1% following declines of 1.9% in 2013 and 2.4% in 2012, the IMF said, cutting its previous forecast for growth of 0.3%, made at the end of July. (Reuters)

UK Retail Sales Boosted By Vacuum Cleaner Sales. UK retail sales rose by 0.4% during August, helped by shoppers looking to snap up high-powered vacuum cleaners ahead of an EU ban on the products. The Office for National Statistics (ONS) also said sales were up 3.9% compared with the same month last year. Demand for household goods – notably furniture and electrical goods - was behind the rise in sales, the ONS said. It also said that prices in stores fell over the year, with food prices seeing their first decline since 2004. Average store prices in August were down 1.2% from a year ago, the ONS said, the largest annual fall since July 2009. (BBC)

ECB Bank-Funding Programme Sees Low Take-Up. A European Central Bank measure designed to stimulate the flagging eurozone economy has seen a low initial take-up by banks. The cheap loans for European banks have been designed to encourage lending to business. But out of total loans of 400bn euros available on Thursday, only 82.6bn was taken up by 255 banks. However, banks may be waiting for separate ECB measures due in October, analysts said. Cheap loans to banks were part of a package announced in June designed to support lending and the economy. (BBC)

Currencies

Euro Recovers From A Two-Year Low Against Pound. he euro recovered from a two-year low against the pound Thursday as investors entered bullish positions in sterling ahead of the results for the closely watched Scottish independence vote. The euro traded at 0.7884 pound Thursday, compared with £0.7896 late Wednesday. The pound pushed higher against the dollar Thursday, trading at $1.6400, compared with $1.6260 late Wednesday. The dollar rose to ¥108.62, versus ¥108.37 in late North American trading Thursday, after earlier tapping ¥108.87, a fresh sixyear high against the Japanese currency. The euro was up at $1.2920, from $1.2867 seen in late North American trading. The ICE Dollar Index, a measure of the dollar against six rival currencies, was at 84.2870, compared with 84.3450 late Thursday. The pound pushed up against the dollar The pair traded at $1.6311, up from $1.6280 seen in late North American trade. (Market Watch)

Commodities

Oil Falls On Supply Glut And Strong Dollar. Crude oil fell on Thursday, pressured by ample supply, concerns about demand growth and a stronger U.S. dollar. Brent fell $1.27 to settle at $97.70 a barrel. Prices have declined around 15% from a nine-month peak of $115.71 reached in June. U.S. crude fell $1.35 to settle at $93.07 a barrel a day after dropping on government data that showed U.S. crude inventories rose 3.7 million barrels last week. (Reuters)

Gold Bounces Off 8-1/2-Month Low On Post-Fed Short Covering. Gold rebounded on Thursday, as investors bought back their bearish bets after speculation over an earlier-than-expected U.S. interest rate hike by the Federal Reserve sent bullion prices to a 8-1/2-month low. Spot gold fell to its lowest since Jan. 2 at $1,216.01 an ounce early on Thursday and was last up 0.2% at $1,224.81 by 4:16 p.m. EDT (2016 GMT). Among other precious metals, silver was up 0.2% at $18.51 an ounce, having touched its lowest since June 2013 at $18.27. Platinum edged down 0.1% at $1,341.75 an ounce, while palladium fell 0.3% to $826.50. (Reuters)