Global

IMF Cuts Global Growth Forecasts Again. The IMF cut its global growth forecasts for a second time this year on Tuesday, citing weak commodity prices and a slowdown in China and warned that policies aimed at increasing demand were needed. The Fund, whose annual meeting starts in Peru this week, forecast that the world economy would grow at 3.1% this year and by 3.6% in 2016. Both new forecasts are 0.2 percentage point below its July forecast and are 0.4 percentage point and 0.2 percentage point below its April outlook, respectively. Among major economies, the United States is expected to grow by 2.6% in 2015 and by 2.8% in 2016. (Reuters)

Malaysia

Budget 2016 Will Be People-Friendly. Budget 2016 will be people-friendly and bigger than the previous one in the quest to help low and middle-income groups cope with inflation and rising cost of living, Deputy Finance Minister Datuk Chua Tee Yong said. However, he declined to elaborate on measures that might be included in the budget that would be tabled by Prime Minister Datuk Seri Najib Tun Razak on October 23. He added that the ministry will continue to look into how to assist or promote affordable housing as there is a huge demand for it. (Bernama)

Malaysia Wins Several TPPA Concessions in Sensitive Areas. Malaysia and eleven other Pacific Rim countries have reached a deal on the most sweeping trade liberalisation deal that will cut trade barriers and set common standards among these countries. International Trade and Industry Minister Datuk Seri Mustapa Mohamed said Malaysia had won several concessions in areas considered sensitive to the country, including protecting the interest of bumiputras, government procurement and state-owned enterprises. Mustapa said Malaysia had stood firm that the TPPA should not hinder the public’s accessibility to affordable drugs and healthcare. (The Star)

Asia

Malaysia, Vietnam Sovereigns Rally on TPP Agreement. Several Asian sovereign credits received a boost today from the signing of a new trade agreement between several countries in the Americas and Asia. The Trans-Pacific Partnership, sealed yesterday, will boost the economies of countries like Malaysia and Vietnam. The agreement will open up opportunities for Malaysia, which does not have any free-trade agreements with the US, Canada or Mexico. On Tuesday morning, Vietnam's sovereign bonds due 2024 tightened 19bp to 333bp over US Treasuries, from T+352, and Malaysia's 2025 sukuk narrowed 4bp to T+156. (Reuters)

Australia Holds Rates as Currency Eases Commodity Price Rout. Australia left interest rates unchanged Tuesday after the local dollar recorded the biggest drop among major currencies last quarter, cushioning the impact of lower commodity prices and a weaker outlook in key trading partner China. Reserve Bank of Australia Governor Glenn Stevens and his board kept the cash rate at a record-low 2%, as predicted by markets and economists, following reductions in May and February. The currency dropped almost 9% in the June-September period. (Bloomberg)

Indian Services Growth Slowed in September - PMI. India's pivotal services industry lost some momentum in September as demand weakened despite firms cutting prices for the first time this year. The Nikkei/Markit Services PMI eased to 51.3 in September from August's 51.8 but marked its third straight month above the 50-level that separates growth from contraction. The prices charged sub-index slumped to a near 5-year low of 49.5 from 51.0 in August as falling commodity prices helped weaken input cost pressures. The central bank downgraded its growth estimates to 7.4% from 7.6% last week. (Reuters)

USA

US Trade Deficit Widens to $48.3 Billion in August. The U.S. trade deficit jumped sharply in August as exports fell to the lowest level in nearly three years while imports increased, led by a surge in shipments of cellphones from China. The deficit increased 15.6% to $48.3 billion, the biggest deficit since March, the Commerce Department reported Tuesday. Exports of goods and services dropped 2% to $185.1 billion, the lowest level since October 2012. Imports rose 1.2% to $233.4 billion. Exports have been hurt this year by the rising value of the dollar, which makes U.S. goods less competitive on overseas markets, and weaker economic growth in China and other major export markets. (AP)

Europe

German Factory Orders Unexpectedly Fall. German factory orders unexpectedly fell in August in a sign that Europe’s largest economy is vulnerable to weaker growth in China and other emerging markets. Orders, adjusted for seasonal swings and inflation, dropped 1.8% after decreasing a revised 2.2% in July, data from the Economy Ministry in Berlin showed on Tuesday. The typically volatile number compares with a median estimate of a 0.5% increase in a survey. Orders rose 1.9% from a year earlier. Domestic factory orders declined 2.6% as demand for investment goods slumped. (Bloomberg)

Poland Keeps Main Rate at Record Low. Poland’s central bank left its benchmark interest rate unchanged at a record low, sticking to a pledge by its governor to keep policy stable as it gauges the increased risks of a weaker-than-expected economic expansion and persistent deflation. The Monetary Policy Council, led by Governor Marek Belka, kept the seven-day reference rate at 1.5% on Tuesday, matching the predictions of economists surveyed. Record-low borrowing costs have failed so far to spur consumer prices, and deflation deepened in September, extending the bout of negative prices to 15 months. (Bloomberg)

IMF Lowers Growth Forecasts for Russia. The IMF has lowered its 2015 and 2016 economic growth forecasts for Russia, the Fund revealed in its World Economic Outlook published on Tuesday. The Fund now expects Russia's economy to contract by 3.8% in 2015 and by 0.6% in 2016, down from its previous forecasts of a 3.4 contraction this year and 0.2% growth next year. The revision brings the IMF into line with the World Bank, which has also recently lowered its Russian growth forecasts. (Reuters)

Currencies

Dollar Slips on Expectations for Later Fed Rate Hike. The U.S. dollar slipped against a basket of major currencies on Tuesday on continued expectations that the Federal Reserve will not hike interest rates this year. The dollar was last down 0.18% against the yen at 120.245 yen. The Australian dollar was last up over 1% against the U.S. dollar at $0.7165 after the Reserve Bank of Australia left interest rates unchanged. The euro was last up 0.70% against the dollar at $1.12685. The dollar was last down 0.92% against the Swiss franc at 0.96700 franc. The dollar index was last down 0.64% at 95.488. (Reuters)

Indonesia's Rupiah Strengthens Most Since 2013 as Funds Return. Indonesia’s rupiah surged the most since May 2012 amid signs investors are returning to the nation’s assets. The rupiah jumped 1.8% to 14,233 a dollar as of 11:36 a.m. in Jakarta after rising as much as 2.2% earlier, prices from local banks show. The currency has strengthened 2.8% this week, paring its loss this year to 13.0%. (Bloomberg)

China Jumps to Fourth Most-Used World Payment Currency. China's yuan became the fourth most-used world payment currency in August, overtaking the Japanese Yen, global transaction services organization SWIFT said on Tuesday. The yuan has surpassed seven currencies in the past three years as a payment currency and is now only after the U.S. dollar, the euro and the sterling. The yuan reached a record high market share of 2.79% in global payments for the month, compared to 1.39% in January 2014. (Reuters)

Commodities

Oil Jumps $2.00, Breaking Range as Supply Seen Ebbing. Oil prices jumped more than $2.00 a barrel on Tuesday, breaking out of a month-long trading range on technical buying and industry talk as well as U.S. government data suggesting the global supply glut could be ebbing. Brent settled up $2.67, or 5.4%, at $51.92, breaking out of the $47 to $50 band it had held since early September. Its session peak, a penny shy of $52, was the highest since Sept. 3, pushing three-day gains past 7%. WTI closed up $2.27, or 4.9%, at $48.53 a barrel. (Reuters)

Gold Gains on Softer Dollar, Views on Fed Rate Outlook. Gold rose to its highest in nearly two weeks on Tuesday as the dollar fell in the wake of disappointing U.S. economic data that raised doubts over a Federal Reserve interest rate rise this year. Spot gold rose 1.4% to $1,151.20 an ounce, the highest since September. 24, and was up 1% at $1,147.01 an ounce by 1844 GMT. U.S. gold futures for December delivery settled up 0.8% at $1,146.40 an ounce. Platinum rose 3.1% to $940.25 an ounce. Silver rose to the highest in more than three months at $16.08 an ounce. It has gained nearly 10% since Thursday's close. Palladium reached its highest since June at $712.50 an ounce. (Reuters)