Global

TPP Deal is Credit Positive, Especially for Asian Sovereigns – Moody’s. The recent pact on the Trans-Pacific Partnership (TPP) trade agreement is credit positive for all 12 participating sovereigns, especially for those in Asia, Moody's Investors Service says. It said while full details of the agreement have yet to be published, greater access to the US for their goods should help make Asian countries the biggest beneficiaries in GDP-relative terms. One credit-negative aspect to the trade deal is that it could hurt governments' fiscal balances by reducing their customs revenues over the longer term. But additional receipts from an expected uptick in economic growth are likely to offset foregone tariff revenue, it said. (Bernama)

Malaysia

August IPI Growth Drops to 3.0% YoY on Mining Drag. The Industrial Production Index (IPI) expanded 3.0% YoY in August, less than consensus and house estimates due to lower external demand for manufactured goods and an unexpected 3.4% YoY contraction in mining output, the first month of negative growth for the volatile sector in 13 months. Manufacturing output and electricity generation did not face the same slump. Manufacturing grew slightly more than expectations, up 4.3% YoY (July: 4.2%). The much smaller electricity sector rebounded 15.5% YoY in August, more than making up for a two month contraction in June-July. (See Economic Viewpoint: Malaysia Industrial Production)

Malaysia Central Bank's 1MDB Move Vital for Integrity. Malaysia’s central bank had to take action against a debt-ridden state investment company to protect the integrity of the financial system, according to Governor Zeti Akhtar Aziz, who said an improvement in the country’s political situation would help the ringgit. The attorney general’s office earlier this month dismissed the central bank’s second request for criminal proceedings against 1MDB for breaching the Exchange Control Act. “Everyone wants these domestic issues to be resolved quickly, because as and when they are resolved, we expect the currency to recover even further,” after gains in recent days, she said. (Bloomberg)

Risks to Growth Outweigh Price Concerns. Malaysia’s growth faces greater risks from a slowdown in the world economy than inflation, central bank Governor Zeti Akhtar Aziz said. The threat of faster inflation will abate after the first quarter of 2016 and interest rates at current levels are supportive of growth, Zeti said in an interview in Lima, Peru Sunday. GDP will increase about 5% this year, and the expansion will be in the same range in 2016 should risks to global growth not materialize. (Bloomberg)

Asia

Rising Food Prices Push India's September CPI Up to 4.4%. A rise in some food prices lifted Indian retail inflation in September after it had hit a record low in the previous month, but inflation is expected to remain low thanks to falling global commodity prices. Retail inflation, which the central bank tracks to set interest rates, rose to 4.41% in September from a revised 3.74% in August, data released by the Ministry of Statistics on Monday showed. Economists had forecast consumer inflation to rise to 4.3% last month. (Reuters)

India’s Industrial Output Climbs to Three-Year High in August. India’s industrial output rose at its strongest pace in nearly three years in August, government data showed Monday. Industrial production, a measure of output in the manufacturing, mining and utilities sectors, rose 6.4% from a year earlier in August, quicker than the 4.1% rise in July and significantly more than the 5.0% increase predicted by economists. That is the strongest growth for the indicator since October 2012. Performance improved across sectors. Manufacturing, which has a 75% weight in industrial production, grew 6.9%, following July’s 4.6% increase. (WSJ)

BOJ's Kuroda Hints October Stimulus Is Unlikely. Bank of Japan Governor Haruhiko Kuroda has poured cold water on mounting expectations for a fresh round of quantitative easing (QE) in October. In an interview on the sidelines of an IMF meeting in Peru, Kuroda said that Japan's inflation rate was in line with the central bank's expectations. He also ruled out taking a page from the European Central Bank's book, saying he wasn't considering using negative interest rates on bank deposits as a way of stimulating the economy. (CNBC)

Americas

Fed's Brainard Urges Caution Amid Fed Split on Rate Hike Timing. The Federal Reserve should hold off on any interest rate hike until it is clear that a global slowdown, trouble in China and other international risks will not push the U.S. recovery off course, Fed Governor Lael Brainard said on Monday in one of the strongest defenses yet of a go-slow approach to rate policy. "I view the risks to the economic outlook as tilted to the downside. The downside risks make a strong case for continuing to carefully nurture the U.S. recovery - and argue against prematurely taking away the support that has been so critical to its vitality," Brainard said. (Reuters)

Mexico Industrial Output Expands for Third Month in August. Mexican industrial output expanded in August for the third month in a row, as a ramp-up in manufacturing and utilities offset slowdowns in construction and mining, official data showed on Monday. Industrial output rose 0.2% compared to July, the national statistics office said on Monday, on par with analysts' expectations and just below the upwardly revised 0.3% expansion in July. Mexico sends nearly 80% of its exports, mostly factory goods, to the United States. (Reuters)

Europe

ECB's Coeure Says Too Early to Decide on More Stimulus. It is too early for the European Central Bank to decide on expanding or extending its asset-purchase program, a member of the ECB's executive board said on Monday, even after inflation in the currency bloc turned negative. ECB executive board member Benoit Coeure said any such decision would be premature, even if the central bank stood ready to act, if necessary. He said the euro zone's economy was recovering, albeit modestly, and the biggest downside risks were coming from other regions, especially emerging markets. (CNBC)

Currencies

Dollar Hits Three-Week Lows on U.S. Rate-Hike Doubts. The dollar was little changed on Monday after earlier hitting a three-week low versus a basket of major currencies on doubts whether the Federal Reserve would raise interest rates later this year. The dollar index declined to a three-week low of 94.619 before edging up to 94.832, little changed from late Friday. The greenback was down 0.2% against the yen, at 119.96 yen, while the euro was up 0.1% versus the dollar, at $1.1363, after hitting a three-week high of $1.1396. (Reuters)

Yuan Advances Most Since March as Central Bank Signals Support. The yuan strengthened the most since March amid speculation Chinese lenders sold dollars to prop up the exchange rate as the IMF prepared to take a decision on whether to include the currency in its basket of global reserves. This comes after People’s Bank of China Deputy Governor Yi Gang said that his nation is planning several steps to push the yuan’s case, such as opening the domestic bond and currency markets to foreign central banks and issuing three-month Treasury bills weekly. The yuan climbed 0.35%, the most since March 19, to close at a two-month high of 6.3230 a dollar in Shanghai. (Bloomberg)

Commodities

Oil Slides; Fed Bets Keep Greenback under Pressure. Crude oil futures tumbled on Monday on profit-taking and a report of higher OPEC production, while pressure lingered on the U.S. dollar as markets priced the possibility that the Federal Reserve would not begin a tightening cycle this year. Crude oil futures settled 5.1% lower after gaining almost 9% last week, with Brent posting its largest daily drop in six weeks, down 5.3%. Brent settled below $50 a barrel on its biggest daily percentage decline since the start of September. U.S. crude settled down 5.1% at $47.10. (Reuters)

Kuwait Oil Minister Says No Calls Within OPEC for Policy Change. Kuwait's oil minister said on Monday there were currently no calls from within OPEC to change the oil-producing group's output policy and that a market exit by high-cost producers could help buoy oil prices in 2016. He said there were also positive signs regarding global economic growth. He said any impact on policy from the return of Indonesia to the Organization of the Petroleum Exporting Countries (OPEC) would be determined at the group's next meeting. (Reuters)

Gold Hits 3-Month High as Traders Bet on U.S. Rate Hike Delay. Gold rose to its highest level since early July on Monday as expectations that the Federal Reserve will postpone an expected U.S. interest rate hike beyond the end of the year pressured the dollar to three-week lows against a currency basket. Spot gold reached a peak of $1,169.00 an ounce and was up 0.6% at $1,163.96 an ounce at 1401 GMT, while U.S. gold futures for December delivery settled up $8.60 an ounce at $1,164.50. Palladium fell as much as 2.6% to $689 an ounce, falling from Friday's four-month high. Silver was up 0.1% at $15.84 an ounce, while platinum was up 1.3% at $991.50 an ounce. (Reuters)