Global

Weaker Global Growth Complicates Development Goals – IMF. Downside risks to global growth have increased and the weak economic outlook will make achieving world development goals more difficult than in the past, the head of the IMF said on Tuesday. Downside risks to the global economic outlook have increased, including from lower commodity prices, a realignment of monetary policy and slower growth in China, Lagarde said. In a discussion note, IMF staff said building solid public finances, investing in education, cutting energy subsidies and deepening financial markets are among policies countries should follow to support sustainable development. (Reuters)

Malaysia

BNM Reserves Log US$0.6b Increase in 1H of September. Malaysia’s foreign exchange reserves rose by US$0.6b in the 1H of September following a US$0.2b increase in the 2H of August. The combined increase is modest compared to the US$8.8b decline in reserves in the month of July but is an encouraging sign that the deterioration in reserves seen this year has probably halted. As at 15 September 2015, the international reserves held by Bank Negara Malaysia totalled US$95.3b (RM360.1b). The current reserves level is sufficient to finance 7.3 months of retained imports and is 1.1 times the short term external debt. (See Economic Viewpoint: BNM Forex Reserves)

No Financial Assistance for ValueCap, Says Committee. The government does not provide financial assistance to ValueCap Sdn Bhd, said the Special Economic Committee (SEC). In a statement today, the SEC said ValueCap has the mandate to raise up to RM20 billion from its shareholders and financial institutions. The SEC said the fund was a back-up in the event the subdued capital market scenario continued. From 2003 to 2013, ValueCap achieved investment returns of as high as 16.3% per annum as against an average of 10% annual increase recorded by the KLCI over the same period. (Bernama)

Malaysia’s 5-Year CDS Premium Rises Most in 8-Months. Five-year credit-protection costs for Malaysia rose 16 bps yesterday, most since Jan. 6, to 188 bps, according to CMA New York data. Five-year default-swap contracts on its debt are an average of 98 basis points higher than for similarly-rated Poland, Latvia and Slovenia. The Malaysian contracts averaged one point less than for the three countries at the end of last year. (Bloomberg)

Asia

ADB Sees Slower Growth for Asia, China in 2015, 2016. Growth in developing Asia will likely be slower than previously thought as a slowdown in China's economy hurts demand, the Asian Development Bank said, and urged policymakers in the region to strengthen financial-system buffers against external shocks. Developing Asia is now expected to grow 5.8% and 6.0% this year and in 2016, down from the ADB's July forecast of 6.1% and 6.2%. Southeast Asia's growth will be at 4.4% this year, same as last year and down from its July forecast of 4.6%, before accelerating to 4.9% next year, the ADB said. (Reuters)

China Government Think Tank Says Economy May Grow 6.9% This Year. China's economic growth will likely slow to 6.9% this year amid gloomy short-term macroeconomic trends and the threat of deflation, state media quoted an annual report from a top government think tank. The Chinese Academy of Social Sciences (CASS) said in its "blue book" report on China's economy that the slowdown was wrought by falling investment by companies and individuals, and growing debt pressures faced by local governments, the Shanghai Securities News reported. The economy expanded 7% in the second-quarter. (Reuters)

Indonesia to Borrow $4.2 Billion from World Bank, ADB to Cover Budget Deficit. Indonesia will borrow $4.2 billion in multilateral loans from the World Bank and Asian Development Bank to cover a widening budget deficit, a finance ministry official said on Tuesday. Scenaider Siahaan, an official with the finance ministry's debt management office said Indonesia is choosing foreign sources because the market is still volatile and Indonesian growth is slowing. Siahaan said the loans would strengthen forex reserves, which the central bank said fell to $103 billion this week. (Reuters)

Europe

German Wages Rose at Fastest Pace on Record in Q2. German real wages rose by 2.7% in the second quarter, the strongest increase since records began in 2008, the Federal Statistics Office said on Tuesday. The data showed the strongest increases on a pre-inflation, or nominal basis, were in eastern Germany and in the unskilled, low-wage sector, suggesting the introduction of an 8.50 euro minimum wage at the start of the year had an impact. Low inflation also supported real wage growth. Real wages have now risen by more than 2% in three consecutive quarters. (Reuters)

Osborne Says Exit from U.K.’s Loose Monetary Policy Is Coming. Chancellor of the Exchequer George Osborne said the U.K.’s exit from loose monetary policy “is going to come” and Bank of England Governor Mark Carney has indicated that borrowing costs are set to rise. Carney said last week there’s a chance that rates will need to increase from a record low in early in 2016 if the economy continues to grow and inflation pressures pick up. The governor was among the majority of officials who voted this month to keep the benchmark at 0.5%. (Bloomberg)

UK Manufacturing Stalls in September, Outlook Weak – CBI. British manufacturing output failed to expand in the three months to September for the first time since early 2013, adding to signs of a slowing in the country's economy, an industry survey showed on Tuesday. The Confederation of British Industry said total orders and export orders deteriorated with demand from abroad falling back to its lowest level in six months. The monthly total order book balance from the CBI's industrial trends survey slipped to -7 in September from -1 in August. Economists polled had expected an unchanged reading. Expectations for output over the next three months were the weakest since October 2013. (Reuters)

Redirect EU Funds to Support Reforms – Germany. Billions of euros that the European Union spends to subsidize agriculture and to pay for infrastructure in less developed regions should be redirected to support structural economic reforms, Germany said on Tuesday. German Finance Minister Wolfgang Schaeuble told a conference that the nearly 1 trillion euros that the 28-nation bloc will spend from 2014 to 2020 was allocated toward historical priorities rather than current challenges. Schaeuble pointed to economic and administrative reforms recommended to each EU country by the European Commission. (Reuters)

Currencies

Dollar Extends Gains against Euro on 2015 Fed Rate Hike Bets. The U.S. dollar hit a more than two-week high against the euro on Tuesday on continued belief that the Federal Reserve would hike rates this year while the European Central Bank could ease further. The euro was last down 0.49% against the dollar at $1.11345. The dollar was last down 0.43% against the yen at 120.055 yen. The dollar was last up 0.32% against the Swiss franc at 0.97480 franc. The dollar index was last up 0.37% at 96.250. That was just under a nearly two-week high of 96.404. (Reuters)

Commodities

Brent Up Slightly while WTI Drops by 2%. Brent settled up while U.S. crude finished down 2% but off its lows after a partial pipeline outage and bets of positive U.S. inventory data helped oil offset some of Tuesday's skittish sentiment caused by weak Wall Street stocks. Brent futures fell more than 2% earlier on Tuesday and U.S. crude tumbled over 3% as U.S. equity markets slumped to a two-week low. Brent settled up 16 cents, or 0.3%, at $49.08 a barrel. U.S. crude's October contract settled down 85 cents, or 1.8%, at $45.83. The nearby November contract, settled down 60 cents at $46.46. (Reuters)

Gold Dips as Renewed Rate Rise Bets Lift Dollar. Gold fell 1% on Tuesday, pressured as the dollar strengthened on renewed expectations that the Federal Reserve will raise U.S. interest rates for the first time in nearly a decade. Spot gold was down 0.7% at $1,125.22 an ounce at 1917 GMT, while U.S. gold futures for December delivery settled down 0.7% at $1,124.80 an ounce. Platinum was down more than 3% to a 6.5-year low. Platinum was down 3.4% at $932.75 an ounce. Spot palladium was down 0.6% at $607.47 an ounce and silver down 2.6% at $14.77 an ounce. (Reuters)