Malaysia

Ringgit Depreciation Encourages Bond Investors. The ringgit's depreciation might encourage new investors in the bond market, says Malaysia University of Science and Technology (MUST), Dean of Business, Dr. Yeah Kim Leng. He said new investors should grab the temporary opportunity in the weaker ringgit environment as it offered a cheap entrance point to the bond market. "Malaysia just needs to ensure it has the credible policy. Maintaining consistencies in policies are key, because investors want a predictable environment," said Dr. Yeah after the Asian Development Bank presented its latest Asia Bond Monitor report. (Bernama)

Asia

China June Factory Activity Shows Signs of Stabilisation. Two private surveys on Tuesday suggest China’s economy may be regaining some momentum. The HSBC/Markit Flash China Manufacturing Purchasing Managers' Index edged up to 49.6 in June, a three-month high, from 49.2, but remained below the 50 mark which separates contraction from expansion. New orders returned to positive territory at 50.3 and new export orders fell at a much slower pace. The China Beige Book quarterly survey painted a much rosier picture, describing a "broad-based recovery" in the second quarter, led primarily by provinces in China's interior. Authors of the report said the two events that stood out were a “welcome resurgence in retail” and a “rebound in property.” (Bloomberg)

Japan Manufacturing PMI Falls in June. Japanese manufacturing activity contracted slightly in June as new orders fell and output growth slowed in a sign the economy may have lost some momentum. The Markit/JMMA flash Japan Manufacturing Purchasing Managers Index fell to a seasonally adjusted 49.9 in June from a final 50.9 in May. The output index fell to a preliminary 50.5 in June, following 51.9 in the previous month. New orders fell to a preliminary 49.4 from 50.9 in May. But new export orders rose to 53.6 from a final 50.6 in the previous month. That marked the fastest expansion in four months, suggesting overseas demand is starting to gather strength. (Bloomberg)

India to More Than Double Capital Injection in State Banks to $3 Billion. India plans to inject about $3 billion into state-owned banks this fiscal year in a push to boost capital and help lenders meet the global Basel III regulatory requirements, Finance Secretary Rajiv Mehrishi said. The planned capital infusion into the state lenders, which account for more than 70% of all outstanding bank loans, is more than double an earlier estimate of 79.4 billion rupees ($1.25 billion) made in the government's budget for this fiscal year. It was unclear, however, what impact the increased funding would have on the fiscal deficit, which the government has targeted at 3.9% of GDP. (Reuters)

India Unveils Plan to Boost Cashless Economy. India has unveiled plans to cut transaction costs for electronic payments, as part of Prime Minister Narendra Modi's drive to pull more people into the formal economy and boost public revenue. India is among the most cash-intensive economies in the world, with a cash-to-GDP ratio of 12%, almost four times that of markets such as Brazil and South Africa, global payments company MasterCard estimates. Many small Indian businesses and consumers now prefer cash, to avoid high transaction costs of up to 3% on electronic payments, as well as to escape sales tax. (Reuters)

Taiwan May Export Order Slump Deepens Gloom for Tech Demand. Taiwan's export orders in May fell at their fastest pace in more than two years, darkening the outlook for global technology demand that will likely hurt the island's technology exports. The worse-than-expected 5.9% annual decline in May came against expectations for a smaller 0.65% fall and is more than the 4% slide in April. May's drop was the worst since March 2013. Taiwan's orders are seen as a leading indicator of demand for Asia's exports and for hi-tech gadgets. (Reuters)

USA

Sales of New Homes Rise to Highest Level in Seven Years. Purchases of new homes in the U.S. rose in May to the highest level in seven years. Sales climbed 2.2% to a 546,000 annualized pace, exceeding all forecasts in a survey of economists and the most since February 2008, Commerce Department data showed Tuesday in Washington. Readings for February through April were revised up. Stronger employment and income prospects are bolstering would-be home buyers, allowing them to take advantage of relatively cheap borrowing costs. (Bloomberg)

U.S. Markit PMI at Slowest since October 2013. Growth in the U.S. manufacturing sector moderated in June for a third month in a row, according to financial data firm Markit. Its preliminary U.S. Manufacturing Purchasing Managers' Index declined to 53.4 in June, it lowest since October 2013, from a final May reading of 54. Economists polled had forecast the June figure would be 54.2. “While the survey data point to the economy rebounding in the second quarter, the weak PMI number for June raises the possibility that we are seeing a loss of momentum heading into the third quarter," said Chris Williamson, Markit's chief economist. (Reuters)

Orders for U.S. Capital Goods Rise as Investment Stabilizes. Orders for business equipment rose in May for just the second time this year, indicating demand for American-made manufactured goods is stabilizing. Bookings for non-military capital goods excluding aircraft rose 0.4% last month after a 0.3% decrease in April, data from the Commerce Department showed Tuesday in Washington. Orders for all durable goods, items meant to last at least three years, declined 1.8%, reflecting a drop in the volatile aircraft category. (Bloomberg)

Europe

Eurozone Composite PMI Hits Four-Year High. An index of euro-area factory and services unexpectedly as growth gained momentum in Germany and France, the bloc’s two largest economies. Markit said on Tuesday that its composite index increased to 54.1 from 53.6 in May. That’s above the 50 mark that divides expansion from contraction and exceeds the median estimate of economists, who forecast it would slip to 53.5. The euro-zone economy is weathering the Greek debt standoff “relatively well,” said Chris Williamson, chief economist at Markit. (Bloomberg)

German Manufacturing, Services PMI Strengthens. Germany’s economy gained momentum this month, with a gauge of business activity rising more than forecast. Markit said on Tuesday its composite index of services and manufacturing climbed to 54 from 52.6 in May, above the 50 mark that divides expansion from contraction and was stronger than the forecast reading of 52.7. The data “paints a mixed picture,” said Oliver Kolodseike of Markit. “While companies reported that output rose at a stronger rate than in May, the latest increases in new business and employment were only slight and suggest that activity growth may slow again in coming months.” (Bloomberg)

Germany to Issue $5.6 Billion Less Debt than Planned for Q3. Germany plans to issue 5 billion euros ($5.63 billion) less debt in the third quarter than originally planned, the finance agency said on Tuesday, after tax receipts soared in the first five months of the year. Federal tax revenues rose 8.5% to 101 billion euros year on year between January and May as workers in Europe's largest economy benefit from high employment and rising wages. (Reuters)

French PMI at Highest Since 2011. An index of French factory and services output rose to its highest in almost four years this month. Markit said on Tuesday its Purchasing Managers Index rose to 53.4 from 52 in May exceeding the median forecast of economists for an unchanged reading. A gauge of manufacturing increased to 50.5 from 49.4, the first time it’s indicated growth since April 2014, and a measure for services climbed to 54.1 from 52.8. “The French economy gained further growth momentum in June, driven by a stronger service-sector performance and a stabilization in manufacturing,” said Jack Kennedy of Markit. (Bloomberg)

Currencies

Dollar Aided by Rising Yields while Euro Sinks. U.S. dollar rose on Tuesday, underpinned by prospects for interest rate increases and rising U.S. Treasury yields, while the euro fell on concerns that any debt deal agreed by Brussels and Athens will not get passed by the Greek Parliament. A seven-year high in new U.S. single family home sales last month, combined with U.S. durable goods orders suggesting the manufacturing sector is at least stabilizing after a weak period, helped support the case for lifting benchmark U.S. interest rates. The euro fell to a two-week low of $1.11350, down nearly 2%, before recovering to $1.11740, off 1.47% on the EBS trading platform. The dollar index was up 0.9%. At 0.93880 Swiss francs, the dollar marked a more than one-week high but slid to 0.93325 francs, still up 1.47% on the day. (Reuters)

Commodities

Crude Up About 2% as U.S. Oil Products Jump. Crude futures rallied around 2% on Tuesday, latching onto a rebound in oil products ahead of U.S. inventory data expected to show more crude draws and gasoline demand. Also supporting prices were signs of trouble with an impending Iranian nuclear deal that could delay Tehran's hopes of lifting Western sanctions on its oil exports. A strong dollar, which usually pressures commodity prices, did little to temper the rally. Brent crude futures settled up $1.11, or 1.8%, at $64.45 a barrel. U.S. crude futures settled at $61.01, up 63 cents, or 1%. (Reuters)

Gold Retreats as Greek Hopes Lift Stocks. Gold eased on Tuesday as the euro slid sharply against the dollar, and as stock markets rallied on hopes that Greece would reach a deal with its creditors to stave off default. Spot gold was down 0.7% at $1,176.79 an ounce by 1844 GMT, while U.S. gold futures for August delivery settled down $7.50 at $1,176.60. Silver was down 2.4% at $15.72 an ounce, while platinum was up 0.4% at $1,061.50 and palladium was up 0.04% at $693.75. Platinum had dropped to its lowest in more than six years on Monday, at $1,053.75 an ounce. (Reuters)