Malaysia

1MDB Settles $975 Million Deutsche Bank-Led Syndicated Loan. 1Malaysia Development Bhd., the debt-ridden state investment company, said it repaid a $975 million syndicated loan led by Deutsche Bank AG. The repayment is part of 1MDB’s plan to reduce its debt levels and in line with a strategy approved by the Malaysian cabinet, the company’s President Arul Kanda said in an e-mailed statement Monday. The government said last month funds to repay the loan would come from Abu Dhabi’s state-owned International Petroleum Investment Co. The early settlement of the loan that was due Sept. 1 comes as the Kuala Lumpur-based company seeks to wind down its operations. (Bloomberg)

Asia

Japan Growth Gets Sharp Revision Up. Japan’s economy grew faster than initially estimated in the first quarter, as the world’s third largest economy continued its recovery from last year’s recession on the back of robust exports to the U.S. and China. Gross domestic product expanded at an annualized pace of 3.9% in January-March, according to data released Monday. The revised figure compares with a preliminary reading of 2.4% growth. The second straight quarter of growth follows last year’s contraction triggered by the first increase in the sales tax in 17 years. The data showed that business inventories contributed 2.2% to the overall growth, compared with a preliminary figure of 2.0%. Exports grew at an annualized rate of 9.9% while household spending rose 1.5%, both figures unchanged from the preliminary readings. (WSJ)

China’s Exports Decline for a Third Month in Drag on Growth. China’s exports declined in May for a third straight month and imports slumped for the seventh, underscoring weak external demand and a sluggish domestic environment. Overseas shipments fell 2.8% from a year earlier in yuan value, the customs administration said in Beijing on Monday. That compared with the median estimate for a 4% decline. Imports slid 18.1%, leaving a trade surplus of 366.8 billion yuan ($59.1 billion). China’s exports last month fell 2.5% from a year earlier in dollar terms, while imports plunged 17.6%, leaving a trade surplus of $59.49 billion, customs data showed. (Bloomberg)

Indonesia Default Risk Jumps Most in Asia on Fund Outflow Fears. The cost to insure Indonesia’s sovereign bonds against default rose to a five-month high as the falling rupiah and accelerating inflation heighten outflow risk. Five-year credit default-swaps on the country’s debt advanced 17 basis points to 175 in the two weeks through Friday, the most in Asia. Central bank Governor Agus Martowardojo said Monday that the authority sees opportunities to buy government notes when yields, already at a 15-month high, increase as the U.S. prepares to raise borrowing costs. (Bloomberg)

Europe

German Exports Beat Forecasts in April. German exports and industrial output both rose more sharply than expected in April. Seasonally adjusted exports jumped by 1.9% on the month, data from the Federal Statistics Office showed on Monday, far outstripping the consensus forecast of analysts for a rise of 0.1%. Imports meanwhile fell 1.3%, countering expectations for a rise of 0.5% on the month and widening the country's trade surplus to 22.3 billion euros. That may add fuel to the international debate over Germany's high current account surpluses as the G7 meets in Bavaria. (Reuters)

Iceland Moves on Capital Controls, to Tax Money Outflows. Iceland laid out plans on Monday to directly or indirectly tax creditors that want to take assets out of the country from banks that collapsed in 2008, the first step in lifting capital controls and rejoining the international financial community. The government proposed a 39% tax that creditors would have to pay if they did not come up with "stability" conditions they all agreed to by the end of this year. These terms are in effect a form of contribution by the creditors to state coffers. The island nation of 330,000 is emerging from hardship following its 2008 financial meltdown. (Reuters)

Currencies

Dollar Drops Even as Obama Denies Report on Currency Remarks. The dollar fell off 13-year highs against the yen on Monday after a wire service report, denied by President Barack Obama, that claimed to cite remarks by him on the greenback's strength. The euro climbed more than 1% to top $1.12 against the dollar, lifted by a rise in German bund yields and solid German data that stoked optimism about the euro zone's economic prospects. The dollar was last off 0.4% at 125.12 yen, having hit a 13-year high of 125.86 yen on Friday. The dollar index was down 0.70%. The euro also rose strongly against sterling and yen, helped by the rise in benchmark German bund yields and better-than-expected industrial output figures. The euro was last up nearly 1% against sterling and 0.70% against Japan's currency. The Turkish lira dropped 3.6% to 2.7590 to the dollar as investors fretted over the possibility of a minority or coalition government after the ruling AK Party failed to win a majority in a parliamentary election. (Reuters)

Ringgit Falls to 9-Year Low against US Dollar. The ringgit slid to a nine-year low as the US dollar climbed sharply Monday, as robust US jobs data bolstered investors' confidence for a much-awaited Federal Reserve interest rate increase later this year. At 5pm Monday, the ringgit was trading at RM3.766 against the dollar. The ringgit was the worst performing currency among Asian peers last week, dropping 1.4%. It coincided with a sharp fall in the price of 10-year Malaysian Government Securities (MGS), the yield of which shot up to its highest this year at more than 4%. Malaysian government bonds tumbled in thin trade today as foreigner investors continue their sell-off position on government debt. (The Sun)

Commodities

Oil Falls as China Cuts Crude Imports. Oil fell by 1% or more on Monday on a slump in Chinese demand and worries that OPEC's decision to pump crude without restraint could prolong the current supply glut, although a weaker dollar limited losses. China, the top net oil importer in the world, bought about a quarter less crude oil in May than it did in April, official data showed on Monday. In the oil products category, imports fell by more than 6%, against a 10% drop in exports. Brent settled down 62 cents, or 1%, at $62.69 a barrel. U.S. crude settled down 1.7%, or 99 cents, at $58.14. (Reuters)

Gold Edges Up after 3-Day Drop. Gold rose slightly after a three-day streak of declines on Monday as the dollar and stock markets fell, though prices hovered near 11-week lows after Friday's jobs data fueled speculation that U.S. interest rates may rise in September. Spot gold was up 0.2% at $1,174 an ounce at 1903 GMT, while U.S. gold futures for August delivery settled up $5.50 at $1,173.60 an ounce. Spot platinum rose 0.6% to $1,097.70 an ounce. Silver slipped 0.4% to $15.99 an ounce, while palladium fell 0.8% to $742.70 an ounce. (Reuters)