Global

WTO Cuts Trade Forecasts After Trade Shrinks in 1H15. The World Trade Organization cut its forecasts for global goods trade on Wednesday after quarterly growth turned negative, with trade shrinking by an average of 0.7% in the first two quarters of this year. The WTO sees world trade growth of 2.8% this year and 3.9% in 2016, revised down from the forecasts it made in April of 3.3% and 4.0%, respectively. Risks, including a potential U.S. interest rate rise and further slowing in developing economies, are "firmly on the downside", the WTO said in a statement. (Reuters)

Softness in Global Economy to Extend Into 2016 - IMF. A relentless deceleration in the economies of the developing world will cause global growth to slow this year and only pick up a bit more pace in 2016, the head of the International Monetary Fund said on Wednesday. In a survey of the global economy, she said growth was picking up in the euro area and Japan and still looked robust in the United States and Britain. "The not-so-good news is that emerging economies are likely to see their fifth consecutive year of declining rates of growth," she said. (Reuters)

Malaysia

Tight Liquidity and Money Supply Conditions in August. Money supply growth improved slightly in August but continued to reflect deteriorating monetary conditions from the unrelenting flow of portfolio capital out of Malaysia and other emerging markets. Broad money or M3 grew 4.6% YoY in August, more than the 3.9% YoY in July but otherwise near a 13-year low. Deposit growth was also affected by volatile financial markets and edged up 0.2% MoM and 5.1% YoY, insufficient to keep up with loan growth. Loan growth was stable, even performing slightly better than expected at 10.2% YoY. The loan-to-deposit ratio further increased to 90.4%, the highest in more than 15 years and ever closer to the point of liquidity stress. (See Economic Viewpoint: Malaysia Money & Credit)

Malaysia Better Placed to Ride Out 'Almost Perfect Storm' – Wahid. Malaysia's economy and currency are suffering from "an almost perfect storm" due to an outflow of funds from emerging markets, low oil prices and China's slowdown, the country's economic planning minister said on Tuesday. But he said Malaysia was better placed than in the 1990s Asian financial crisis to ride out hard times. "Based on fundamentals, our currency does not deserve to be this low. Over time we believe that the ringgit will come back to reflect its fundamental value", he said. He added that Malaysian corporates was much better than in 1998. They are less leveraged and not many of them have foreign currency liabilities. (Reuters)

Ringgit's Slide Spurs Worst Quarterly Bond Losses in 6 Years. A slide in Malaysia's ringgit spurred the biggest quarterly loss in the nation's bonds since 2009 and drove up the cost to insure the debt by the most in four years. Malaysia's local-currency bonds dropped 1% this quarter, the biggest decline since June 2009, according to a JPMorgan Chase & Co. index. Five-year credit-default swaps insuring the debt rose more than 1 percentage point to 247, the highest level since 2009, according to CMA prices. The 10-year government bond yield climbed 29 basis points to 4.30% this quarter, the most since the three months ended 2013. (Bloomberg)

Bond Market to Remain Intact, Even With Foreign Investor Sell Off – Zeti. Malaysia's bond market would remain intact even if there should be a sell-off by foreign investors, says Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz. If foreign investors sell the bonds, Zeti said Malaysia still has its domestic institutional investors such as the Employees Provident Fund, Permodalan Nasional Bhd and Tabung Haji. “We don't expect any collapse of our bond market," she told reporters. (Bernama)

Malaysia Ranked 18th in Latest WEF Competitiveness Report. Malaysia moved up two positions to 18th placing in the latest world competitiveness report by the World Economic Forum. It marks Malaysia's highest ranking since 2005 in the highly-influential and closely monitored report, which includes 140 economies. International Trade and Industry Minister Datuk Seri Mustapa Mohamed described the ranking as an endorsement of the progress through the Government Transformation Programme (GTP) and Economic Transformation Programme (ETP). (New Straits Times)

Asia

Japan Big Manufacturers’ Mood Worsens in Q3 - BOJ Tankan. Confidence at big Japanese manufacturers worsened for the first time in three quarters in the three months to September and is seen declining further ahead, a closely watched central bank survey showed. The headline index for big manufacturers' sentiment fell 3 points from three months earlier to plus 12 in September, the Bank of Japan's quarterly "tankan" survey showed on Thursday. Big firms plan to raise capital expenditures by 10.9 percent in the fiscal year that started April 1, compared with their previous plan to boost capital spending by 9.3 percent. (Reuters)

Japanese Industrial Output Unexpectedly Drops for Second Month. Japan’s industrial output unexpectedly fell, raising concern that the economy may have fallen back into its second recession since Prime Minister Shinzo Abe took government. Production dropped 0.5 in August from July, when it slid 0.8%, the trade ministry said on Wednesday. Economists had projected a 1% gain while the government had estimated a 2.8% expansion. Retail sales data also showed weakness, with no improvement in August from a month ago. Inventories rose 0.4% in August from July. As stockpiles of unsold goods mount, companies are less likely to expand output in the future. (Bloomberg)

China Business Confidence Falls. Business confidence among entrepreneurs in China fell in the third quarter of 2015 from the second quarter, according to a survey by the People's Bank of China published on Wednesday. Another central bank survey showed more bankers believed the economy had cooled in the third quarter compared with the second quarter. Fewer households rated housing prices "unacceptably high" in the third quarter versus the second, a separate survey showed. (Reuters)

China Cuts Down Payment Requirements to Boost Property Sector. China on Wednesday said it will cut the minimum down payment level for first-time home buyers in many cities, stepping up support for the sluggish property market and stumbling economy. It was the second measure in two days to fire up consumption following a government decision to halve the tax on the sale of small cars. The central bank and banking regulator said they would be lowering minimum down payments for first-time home buyers to 25%, from the previous 30%, in cities that do not have restrictions on purchases. (Reuters)

Hong Kong Sees 2.0% - 4.0% Growth as 'New Normal'. Hong Kong is looking at a "new normal" economic growth rate of 2.0% - 4.0%, about half the pace at which it grew in 2011, as its export-dependent economy grapples with a slowdown in China and elsewhere, Financial Secretary John Tsang told Reuters. Hong Kong's economy grew 2.8% in the second quarter this year, far below the heady rates of nearly 8% seen in the first quarter of 2011. The government forecasts growth for 2015 at between 2.0% - 3.0%. (Reuters)

Thai Government Expects to Inject 285 Billion Baht Into Economy. The Thai government, facing challenges in growing the economy, is expected to inject 284.90 billion baht into the economic system through economic stimulus in the fourth quarter of this year. This represented an increase of 126.74 billion baht compared with the same period last year, according to Somsak Chotrattanasiri, Director of the Bureau of Budget. Thailand's economy this year is expected to grow by 2.7% - 3.2%, according to the Office of the National Economic and Social Development Board. (Bernama)

USA

U.S. Private Sector Adds 200,000 Jobs in September - ADP. U.S. private employers added 200,000 jobs in September, beating economists' expectations and suggesting there might be enough jobs growth for the Federal Reserve to raise interest rates later this year, a report by a payrolls processor showed on Wednesday. Economists surveyed had forecast the ADP National Employment Report would show a gain of 194,000 jobs. Private payroll gains in August were revised down to 186,000from an originally reported 190,000 increase. (Reuters)

Europe

Euro-Area Inflation Rate Turns Negative as ECB Debates Stimulus. The euro area’s inflation rate unexpectedly turned negative in September for the first time in six months, adding pressure on the European Central Bank to bolster stimulus. Consumer prices in the 19-nation currency bloc fell 0.1% from a year earlier, according to a preliminary report published by the European Union’s statistics office on Wednesday. Economists predicted an inflation rate of zero in a survey. Unemployment in the region remained unchanged in August at 11%, Eurostat said in a separate release. The declining prices are largely a consequence of cheaper energy. (Bloomberg)

U.K. Economy Regains Recession Losses as Wealth Increases. A key gauge of wealth in Britain has risen above its pre-recession peak and workers are seeing their compensation grow at the fastest pace in eight years. New data from the statistics office shows that GDP per head in the second quarter was 0.6% above its level in early 2008. The economy grew 0.7% in the period, the Office for National Statistics said Wednesday, unrevised from a previous estimate, with net trade driving the expansion. The improvement was driven by trade, with the deficit in goods and services narrowing to 0.7% of output, the least since 1998. (Bloomberg)

German Unemployment Inches up in September. German unemployment inched up on a seasonally-adjusted basis in September, but the unemployment rate remained at a post-reunification low of 6.4%, in a positive sign for consumer spending in Europe's largest economy. The Federal Labour Office reported on Wednesday that the seasonally-adjusted unemployment total rose by 2,000 to 2.795 million. That compared with the Reuters consensus forecast for a drop of 5,000. The unadjusted unemployment total fell however to 2.708 million, the lowest level since 1991, the Office said. (Reuters)

EU to Ease Capital Rules for Banks, Insurers to Boost Economy. The European Union will ease capital rules it imposed on banks and insurers since the financial crisis to help markets raise more funds for reviving economic growth. The bloc's financial services chief, Jonathan Hill, announced on Wednesday his plan to put in place the building blocks of "capital markets union" by 2019. Early initiatives include making it easier for banks to sell high quality securities based on the pooling of loans like mortgages to institutional investors. He also wants to encourage insurers to invest in infrastructure like roads and digital networks by cutting their capital charges on such investments. (Reuters)

France to Cut Corporate, Income Taxes in 2016 Budget. The French government will cut taxes for a total of 11 billion euros ($12.3 billion) next year, according to budget plans that aim to loosen up an economy burdened with high unemployment and weak growth. The budget detailed Wednesday in a Cabinet meeting is the first under President Francois Hollande to meet the government's deficit targets. The government plans 9 billion euros in corporate tax breaks to boost hiring and investment. Income taxes will be cut by 2 billion euros. (AP)

Currencies

Dollar Gets Data Boost, Ends Quarter Ahead by 0.80%. The dollar rose on Wednesday, eking out a small quarterly gain with a lift from strong private-sector U.S. jobs data, while the euro fell back on news that the Eurozone had slipped into deflation. The gains kept the dollar on track for a third-quarter net rise of 0.80%. The dollar was up 0.20% against the yen to just under 120 yen. The euro fell against the dollar by 0.75% to $1.1166 and was down 0.5% against the British pound after the Eurozone inflation report. (Reuters)

No Need to Peg Ringgit to US Dollar – Zeti. There is still no need to peg the ringgit to the US dollar currently despite the continued downtrend of the local unit, says Bank Negara Malaysia (BNM) Governor Tan Sri Dr Zeti Akhtar Aziz. "If you peg the currency, something else will adjust, either prices or demand conditions, and those might have greater effects on our economy," she told reporters. At this point of time, Zeti said, the Government was not envisaging any measures like capital control as Malaysia has the market mechanism that adjusted to certain economic situation. Zeti said the weakening of the ringgit was the result of many factors globally and BNM would ensure that the market would remain orderly. (Bernama)

Commodities

U.S. Crude Down 24% on Quarter. Oil prices ended mixed in volatile trade on Wednesday, with global benchmark Brent up on worries about Russian airstrikes in Syria and U.S. crude down after data showing a surge in domestic inventories. For the quarter, both Brent and U.S. crude were down 24% for their sharpest decline since the end of 2014. Brent settled up $0.14, or 0.3%, at $48.37 a barrel. It fell 10% for September. U.S. crude settled down $0.14, or 0.3%, at $45.09. For the month, U.S. crude was down 8%. (Reuters)

Gold Suffers Biggest Quarterly Loss in a Year on Fed Outlook. Gold hit its lowest level in two weeks and recorded its biggest quarterly loss in a year on Wednesday as U.S. jobs data came in stronger than expected and the market awaited on the timing of U.S. interest rate rise. That capped off gold's worst quarter since the third quarter of 2014, having fallen nearly 5% since July. Spot gold was down 1% at $1,115.30 an ounce at 1905 GMT, while U.S. gold futures for December delivery were down $11.60 an ounce at $1,115.20. Spot platinum was down 1% at $904.75 an ounce, and has fallen nearly 16% this quarter. Spot palladium was down 0.5% at $650.75. Silver was down 0.6% at $14.52 an ounce. (Reuters)