Global

Global Yields Tumble as CPI Data Set to Keep Fed Stuck at Zero. Global bond yields fell to a five-month low on average before a report that economists said will show U.S. consumer prices dropped last month, backing the case for the Federal Reserve to keep interest rates on hold. Sovereign bond yields in developed markets slid to 0.96% on average Wednesday, the lowest level since April 30, according to Bloomberg World Bond Indexes. Treasuries slipped Thursday in Asian trading as lower yields began to curb demand. Investors demanded 157 basis points of extra yield to own 30-year bonds instead of five-year notes Wednesday, the biggest difference in almost a year. (Bloomberg)

Asia-Pacific

Bank of Korea Trims Forecasts While Holding Rate at Record Low. The Bank of Korea reduced its forecasts for inflation and economic growth while holding its key interest rate unchanged at a record low as it weighs some signs of a pick-up in domestic activity against continuing weakness in exports. The unanimous decision to hold the seven-day repurchase rate at 1.5% was forecast by 15 of 17 economists surveyed. Governor Lee Ju Yeol reduced his GDP growth forecast fractionally to 2.7%, from 2.8% previously. (Bloomberg)

Indonesia's Trade Surplus Surges in September as Imports Drop. Indonesia's trade surplus beats expectations to rise sharply to $1.02 billion in September as imports dropped faster than exports, official data showed Thursday. The trade surplus more than doubled from $433 million in August, helping narrow Indonesia's current-account deficit. The surplus was higher than the median $900 million forecast of 10 economists polled. The official Statistics Agency said exports dropped 1.55% from the previous to $12.53 billion, and contracted 17.98% from a year earlier. Imports dropped 7.16% from August to $11.51 billion, and 25.95% from a year earlier. (Dow Jones)

Indonesia Holds Rate Even as Rupiah Gain Offers Window to Ease. Indonesia’s central bank kept its main interest rate unchanged for an eighth month, refraining from easing even as recent gains in the rupiah and declining odds of a Federal Reserve rate increase this year create room to act. Governor Agus Martowardojo and his board held the reference rate at 7.5%, Bank Indonesia said on Thursday, as predicted by all 25 economists surveyed. (Bloomberg)

Thai Stimulus Sufficient, but Government “Won’t be Complacent.” Measures already announced to shore up growth in Thailand should be sufficient but the government will not be complacent, a deputy prime minister said on Thursday. "From now on, you will see less economic stimulus because we believe what has come out should be enough to help the economy to get through the difficult period," Deputy Prime Minister Somkid Jatusripitak told an economic forum. "But we won't be complacent and any additional stimulus will be considered if needs be," he said, adding the recently unveiled measures were not aimed at making GDP grow faster than in the rest of the world, but to prevent growth from slowing. (Reuters)

Australian Jobs Dip in September. Australian jobs took a slight slip in September after a run of strong results but unemployment held steady at 6.2% in a mixed report that did nothing to clarify the outlook for another cut in interest rates. In all, 5,100 jobs were lost in September, a modest miss from forecasts of a 5,000 rise. The previous month was revised up to show an increase of 18,000. The jobless rate also surprised by holding at 6.2%, when analysts had looked for a rise to 6.3%. Australia's workforce has been expanding faster so keeping the unemployment rate higher. (Reuters)

China Credit Growth Rebounds as Monetary Easing Spurs Loans. China’s broadest measure of new credit exceeded estimates in September. Aggregate financing rose to 1.3 trillion yuan ($205 billion), from an originally reported 1.08 trillion yuan in August, according to a report from the People’s Bank of China. That exceeded the median estimate for 1.2 trillion yuan in a survey of economists. The report suggests increased infrastructure spending from the government and five interest rate cuts since November are helping boost loan demand. New yuan loans rose to 1.05 trillion yuan, compared to a median estimate of 900 billion yuan in a survey of economists. (Bloomberg)

Americas

U.S. Consumer Prices Fall, Clouding Fed Rate Decision. The consumer-price index, which measures what Americans pay for everyday goods and services, fell a seasonally adjusted 0.2% in September, the second straight month of overall price declines, the Labor Department said. The monthly pace of inflation has been steadily falling since May, when renewed weakness in gas prices took hold. Prices were unchanged over the past year, but gasoline prices have fallen 29.6% during that time, the department said. Excluding the volatile food and energy categories, prices rose a relatively firm 0.2% in the month and a moderately healthy 1.9% over the past year. (WSJ)

Jobless Claims in U.S. Fall to Match Lowest Level Since 1973. The number of Americans submitting applications for jobless benefits unexpectedly declined last week to match the fewest in four decades. Initial unemployment claims dropped by 7,000 to 255,000 in the week ended October 10, a Labor Department report showed Thursday. The median forecast of economists surveyed called for 270,000 applications. The decline brought the monthly average to its lowest level since December 1973. Jobless claims matched the low reached in July - the fewest since November 1973. Estimates in the Bloomberg survey of 45 economists for this week ranged from 255,000 to 275,000. (Bloomberg)

U.S. Budget Gap Hits Eight-Year Low as Tax Receipts Reach Record. The U.S. budget deficit shrank to the smallest since 2007 as stronger individual and corporate tax revenue boosted receipts to a record. The shortfall was $438.9 billion in fiscal year 2015, 9.2% less than a year earlier, the Treasury Department said Thursday. Higher tax receipts “can be attributed to a stronger economy,” the department said in a statement. Receipts rose 7.6% and spending increased 5.2% in the 12 months ended September 30. (Bloomberg)

Fitch Cuts Brazil Rating, Says Investment Grade at Risk. Fitch Ratings on Thursday cut Brazil's credit rating to the brink of junk, warning the country could soon lose its coveted investment grade rating as government finances deteriorate amid a prolonged recession and persistent political uncertainty. Fitch cut Brazil's rating to BBB-minus from BBB. It left a negative outlook on the new rating, suggesting it could become the second major rating agency to downgrade Brazil to junk within the next year or so. A second move into junk territory would trigger further losses for Brazil's economy, because it could force investors to sell some of their assets in the country. (Reuters)

Europe

EU Leaders Drop Plan to Fast-Track Banking Union as Germany Resists. European Union leaders on Thursday abandoned plans to seek faster completion of a banking union via a deposit guarantee scheme after Germany opposed the move and had it removed from draft conclusions prepared earlier, diplomats said. Under the banking union project, all large euro zone banks are now under a single supervisor - the European Central Bank - and a common method of winding down banks that fail has been put in place. But the reference to completing the banking union was too much for Berlin and it had to be removed from the final version of the conclusions, EU diplomats said. (Reuters)

Currencies

Dollar Rises on Inflation Data, Euro Falls on Nowotny Remarks. The dollar rose against a basket of currencies on Thursday as underlying domestic inflation strengthened more than expected in September, reviving some expectations the Federal Reserve would raise interest rates this year. The dollar index was last up 0.5% at 94.376, recovering from a seven-week low at 93.806. The euro was down 0.8% at $1.1384, retreating from an earlier peak of $1.1495, its strongest since August 26. The greenback weakened further against the yen on bets the Fed would not raise rates in 2015 due to the weakening global outlook. It hit an eight-month low earlier at 118.07 yen before retracing to 118.69 yen, down 0.1% from Wednesday. (Reuters)

Commodities

Oil Slides for Fourth Day on Big Build in U.S. Crude Stocks. Oil prices fell more than 1% on Thursday, down for the fourth day as the U.S. government reported a larger-than-expected crude stockpile build. The Energy Information Administration said crude inventories rose by 7.6 million barrels for the week ended October 9. U.S. crude was down $0.64, or 1.3%, at $46 a barrel by 1626 GMT. Brent's most-actively traded contract, December, fell by $0.25, or half a%, to $49.44. Brent's November contract, which expires at Thursday's settlement to be replaced as front-month by the December contract, fell by $0.60 to $48.55. (Reuters)

Gold Pares Gains from 3.5-Month High after U.S. Inflation Data. Gold pared gains after reaching a 3.5-month high on Thursday as a stronger-than-expected reading of U.S. inflation drove the dollar index higher. Spot gold was up 0.1% at $1,185.73 an ounce at 1856 GMT, after climbing to $1,190.63, the highest since June 22 and the fifth straight day higher. U.S. gold futures for December delivery settled up $7.70 an ounce, or 0.7%, at $1,187.50. Silver was flat at $16.12 an ounce, after touching its highest since late June at $16.19 an ounce. Platinum was up 0.5% at $1,000.50 an ounce and palladium was up 0.6% at $701.75 an ounce. (Reuters)