Malaysia

Inflation above Expectation at 3.1% in August on Rising Food Prices. Consumer price inflation in August was higher than expected at 3.1% YoY compared to house and consensus estimates of 2.7% and 3.0% respectively. Compared to the previous month, however, inflation was lower. The drop in headline inflation from an 11-month high of 3.3% in July is largely due to lower government-regulated prices for petrol and diesel. Lower transport costs made up for higher food prices. Inflation in the Food & Non-Alcoholic Beverages category, which is the largest component of the Consumer Price Index (CPI) at nearly a third, continued to increase in August to 4.2% YoY, a 19-month high. The second largest category, tracking the cost of housing and utilities, saw a higher than expected 2.7% YoY increase due to higher charges for home repairs. (See Economic Viewpoint: Malaysia Consumer Price Index)

Malaysian Economy to Grow at Slower Pace. The Malaysian economy is expected to continue growing but at a slower rate in the months ahead based on the leading and coincident indices released by the Statistics Department. The leading index, which monitors the economic performance in advance, showed an increase of 0.9% to 118.6 points in July compared with 117.6 points in June. The annual change of LI grew at a slower pace of 0.3% in the reference month as against 0.8% in June. The coincident index, which measures the current economic activity, declined 1.2% in July. (The Star)

Malaysia Deserves Junk Status Like Brazil - Moody’s. Two weeks after Brazil’s credit rating was lowered, CDS investors are punishing other emerging markets facing similar challenges, sending their implied sovereign ratings at least five levels below their official grades, according to data from Moody’s Corp. Malaysia is A3 at the company, though traders see it six levels lower at Ba3. Three Aa3 nations, including China, are perceived by the markets as deserving the lowest investment grade. Most developing nations are confronting the same issues that saw Brazil losing its investment-grade rating at S&P’s – a plunge in commodity prices, a slumping currency and political turmoil. (Bloomberg)

Housing Unaffordability Issue Could Spread If Left Unchecked - KRI. Housing unaffordability could become an issue in other parts of the country if it is not addressed, said Khazanah Research Institute managing director Datuk Charon Mokhzani. He said If Malaysia doesn’t start tackling the problem now, housing unaffordability issue in Penang and Kuala Lumpur could start happening in other parts of the country. He said that as urbanisation is increasing, there's more demand for property. He added that providing more housing loans to buyers will not solve the issue of affordability as it would increase debt burden thus the solution is to reduce house prices. (The Sun Daily)

Asia

Chinese Factory Gauge Drops to Lowest Level since March 2009. A private Chinese manufacturing gauge fell to the lowest in 6.5 years, underscoring challenges facing the economy. The preliminary Purchasing Managers’ Index from Caixin Media and Markit Economics dropped to 47.0 in September. That missed the median estimate of 47.5 in a survey and fell from the final reading of 47.3 in the previous month. Readings remained below 50 since March, indicating contraction. Readings of output, new orders and employment all declined at a faster rate, according to the survey. (Bloomberg)

Japan September Manufacturing PMI Slows as Export Orders Tumble. Japanese manufacturing activity expanded at a slower pace in September as new export orders tumbled the most in almost three years in a worrying sign that China's faltering economy is hurting global demand. The Markit/Nikkei Japan Flash Manufacturing PMI stood at a seasonally adjusted 50.9 in September from a final 51.7 in August. Worryingly, the flash index for new export orders in Japan slipped to 47.8, from a final 51.6 in the previous month to show the biggest contraction since February 2013. (Reuters)

Taiwan Cuts Rate for First Time since 2009 as Exports Falter. Taiwan lowered its policy rate for the first time since the global financial crisis, sending forwards on the island’s currency to a six-year low. The central bank cut the benchmark discount rate by 12.5 basis points to 1.75%, it said in a statement in Taipei on Thursday. Eleven of 24 economists surveyed predicted a cut, while the remaining 13 had expected the rate to be held for the 17th straight quarter. Taiwan’s economy is slowing as its technology exports are weighed by increased competition from China. (Bloomberg)

Singapore Consumer Prices Fall for Tenth Straight Month. Singapore's consumer prices in August saw their biggest YoY fall in nearly six years and the tenth straight monthly decline, on the back of lower Certificate of Entitlement (COE) premiums for cars and falls in housing rentals. Consumer prices slid 0.8% in August from a year, according to figures from the Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS) on Wednesday. The drop was also higher than the 0.5% fall forecast in a poll of 12 economists. Core inflation in August rose 0.2% from a year earlier, off the 0.4% estimate in the poll of economists. (The Straits Times)

India Doesn't Need Extra Stimulus, Will Grow Over 8% - Chief Adviser. India does not need further fiscal stimulus to revive the economy, despite record low inflation and growth seen at the lower end of an 8.1-8.5% target this financial year, chief economic adviser Arvind Subramanian said on Wednesday. He added that the government "will and must" meet the fiscal deficit target of 3.9% of GDP in the current fiscal year. He said public spending along with consumption will be the "big engines" of the economy in the short-term as debt-ridden private companies could take time to raise investments. (Reuters)

China to Cut Administration Fees to Support Economy. China will cut administration fees worth up to 4 billion yuan ($626.78 million) across a dozen sectors including real estate and intellectual property, the country's top planning agency said on Thursday. Effective from October 15, transaction fees for new homes will be lowered to two yuan per square meter from the current three yuan, while transaction fees on existing homes will be cut to four yuan from six yuan, the National Development and Reform Commission said in on its website. The Chinese government has been lowering administration fees in recent months to stimulate economic growth. (Reuters)

USA

Fed Still on Track for Rate Hike This Year – Yellen. Federal Reserve Chair Janet Yellen said on Thursday she expects the U.S. central bank to begin raising interest rates later this year as long as inflation remains stable and the U.S. economy is strong enough to boost employment. Yellen said she and other Fed policymakers do not expect recent global economic and financial market developments to significantly affect the central bank's policy. Much of the recent price weakness is due to special factors such as a strong dollar and low oil prices, which are likely to fade, Yellen said. (Reuters)

U.S. Factory Activity Stuck at Near Two-Year Low in September – Markit. Growth in the U.S. manufacturing sector showed no MoM change during September, according to an industry report released on Wednesday. Financial data firm Markit said its preliminary U.S. Manufacturing PMI for September was 53. That was the same as August, which was its lowest since October 2013. Economists polled had forecast the September figure would be 53.0. Job creation also slowed in September, with the index at 51.4, its weakest since July 2014, down from a final August reading of 52.4. The index's output component inched up to 54.3 from the August final reading of 53.8. (Reuters)

US New-Home Sales Surge 5.7% in August to 7-Year High. Buoyed by steady job gains and low mortgage rates, Americans purchased new homes in August at the fastest pace in more than seven years. New-home sales surged 5.7% last month to a seasonally adjusted annual rate of 552,000, the Commerce Department said Thursday. That is the strongest pace since February 2008. Last month's increase followed an even bigger 12% jump in July, according to the government's revised figures. Surveys show that homebuilders' outlook is the most optimistic in a decade. (AP)

U.S. Jobless Claims Up by 3,000 Last Week. The number of Americans filing for first-time unemployment benefits rose last week, but the level remains consistent with a labor market that is steadily adding jobs. Initial jobless claims, a proxy for layoffs across the U.S., increased by 3,000 to a seasonally adjusted 267,000 in the week ended September 19, the Labor Department said Thursday. Economists surveyed had expected 275,000 new claims last week. Claims for the prior week were unrevised at 264,000. (WSJ)

Orders for US Durable Goods Fall 2% in August. Orders for long-lasting U.S. manufactured goods dropped in August with weakness in a key category that tracks business investment plans. The Commerce Department says that orders for durable goods fell 2% in August compared to July when orders had risen by 1.9%. A key category that serves as a proxy for business investment edged down 0.2% last month after gains of 2.1% in July. (AP)

U.S. Mortgage Applications Jump in Latest Week - MBA. Applications for U.S. home mortgages rose last week as both purchase and refinancing applications climbed, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity rose 13.9% in the week ended September 18. The MBA's seasonally adjusted index of refinancing applications rose 17.7%, while the gauge of loan requests for home purchases, a leading indicator of home sales, rose 9.1% to its highest level since June. (Reuters)

Europe

Eurozone Business Growth Slows in September as Asian Demand Weakens. Eurozone business growth slowed this month as Asian demand weakened, leading to fewer new jobs and forcing factories to reduce output, even though companies raised prices for the first time in over four years, a survey showed on Wednesday. The slowdown came amid debate on whether the European Central Bank should expand its stimulus programme. Markit's Composite Flash Purchasing Managers' Index came in at 53.9 in September, down from 54.3 last month. A poll had predicted a dip to 54.1. A manufacturing PMI fell to 52.0 from 52.3, as export orders growth slowed. (Reuters)

Euro Area Seen on Track for Steady Growth as Orders Accelerate. The euro-area economy probably maintained its 0.4% rate of expansion in the third quarter and will continue to grow amid rising orders and backlogs of work, according to Markit Economics. While a PMI for manufacturing and services slipped to 53.9 in September from 54.3 in August, the third-quarter average stood at the highest level in more than four years, according to a report published on Wednesday. New orders grew at the fastest rate in five months and a gauge for the amount of raw materials bought by manufacturers stood at a 19-month high, signaling increasing production in the coming months. (Bloomberg)

German Consumer Sentiment Tipped to Weaken in October. German consumer sentiment is set to fall for the second month in a row in October, market research group GfK said on Thursday. The forward-looking GfK consumer sentiment index is expected to weaken to 9.6 points in October from 9.9 points in September, GfK said. This reading is below economists' forecasts of 9.8 points in a survey conducted by The Wall Street Journal. Despite the fall, the index is still at a "very good" level, GfK said. Trends in retail sales suggest that consumption overall remains an important pillar of the economy this year. (Dow Jones)

Firms Upbeat in Face of Uncertainty Abroad. Europe's biggest economies are showing signs of resilience despite weakness abroad, with firms in Germany and France expressing optimism about their prospects, surveys on Thursday showed. Germany business morale, tracked by the Ifo economic institute's survey of 7,000 firms, unexpectedly improved in September, suggesting company executives in Germany remained upbeat. Industry morale in France also beat expectations, rising in September to its highest level since July 2011, data from state statistics body INSEE showed. (Reuters)

Currencies

Dollar Extends Drop Against Euro on Global Growth Concerns. The dollar slipped against a basket of major currencies such as the euro and Japanese yen on Thursday after worries about global growth led traders to sell riskier assets and favor lower-yielding currencies. The euro was last up 0.33% against the dollar at $1.12230. The dollar was last down 0.25% against the yen at 120.010 yen after hitting a nearly one-week low of 119.210 yen. The dollar was down 0.29% against the Swiss franc at 0.97690 franc. The dollar index was last down 0.10% at 95.970. (Reuters)

Commodities

Oil Up 1%; Cushing Draw Data Offset by Wall Street Drop. Oil prices rose as much as 1% on Thursday, boosted by inventory draws at the U.S. crude futures' delivery hub although gains were capped by tumbling equity prices on Wall Street. U.S. crude settled up $0.43, or almost 1%, at $44.91 a barrel. It rose $0.69 at the session peak and fell $0.77 at the low. Brent settled up $0.42, or 0.9%, at $48.17. Oil is down more than 25% so far this quarter. (Reuters)

Gold Rallies Most in 8 Months on Weak Dollar, Short Covering. Spot gold rallied more than 2% on Thursday for the biggest one-day gain in almost eight months as a weak U.S. dollar sparked short covering. At 2009 GMT, gold prices were up 2% at $1,153.4 per ounce, while the U.S. gold futures contract for December delivery settled up 2% at $1,153.8 an ounce. Silver rose 2.4% to $15.16 an ounce. Spot platinum was up 2.3% at $958 an ounce, after losing about 5% in the past four sessions. Palladium retreated from an earlier mid-July high, and was up 1.12% at $658.5 an ounce. (Reuters)