Malaysia

Malaysia Pledges US$219 Million to AIIB over Five Years. Malaysia has pledged US$218.8 million for the setting up of the Asian Infrastructure Investment Bank (AIIB). Deputy Foreign Minister Datuk Seri Reezal Merican Naina Merican told reporters that the investment will be paid over the next five years. To date, 53 of the 57 prospective founding countries have signed the agreement, with Malaysia being the 51st signatory. Initiated by China, AIIB, with about US$100 billion in fund, is aimed at promoting infrastructure interoperability and common development in Asia. (Bernama)

Mustapa: Malaysia Can Withdraw from TPPA if 'Uncomfortable' with It. Malaysia can withdraw anytime from the Trans-Pacific Partnership Agreement (TPPA) and even upon implementation, if "uncomfortable" with it. International Trade and Industry Minister Datuk Seri Mustapa Mohamed said no penalties would be imposed on Malaysia on withdrawal as the TPPA was a voluntary agreement. "But, in doing so, we will become less competitive compared to the other member countries," he said. If signed, Mustapa said the TPPA will move into a two-year ratification phase where the rules and regulations will be streamlined based on it. (Bernama)

Asia

Singapore September Exports Up on Electronics. Singapore's exports unexpectedly rose in September as sales of electronics products expanded, but reduced shipments to major markets such as the United States and China indicated sluggish global demand was limiting growth. Non-oil domestic exports edged up 0.3% in September from a year earlier, trade agency International Enterprise Singapore said on Friday. That compares with a 3.8% contraction forecast in a poll. Exports on the month advanced 2.8% in September on a seasonally adjusted basis. Domestic exports of electronics grew 5.7% in September from a year earlier after falling 2.7% in the previous month. (Reuters)

China to Build $5 Billion High-Speed Rail Line in Indonesia. China won the rights to build a $5.5 billion railway line in Indonesia. China Railway International Co. Ltd and a consortium of Indonesian state companies will build the rail line from Jakarta to Bandung, Sahala Lumban Gaol, chairman of the joint venture, said on Friday. Three quarters of the funding will come from China Development Bank, and the project won’t carry an Indonesian state guarantee, he said. Indonesia’s government last month decided to scrap plans for a state-funded bullet train, leaving only China interested in a business-to-business deal. China will hold 40% of the venture, said Xie Feng, China’s ambassador to Indonesia. (Bloomberg)

BOJ's Kuroda: Prices are Improving, Consumer Spending is Recovering. Bank of Japan Governor Haruhiko Kuroda said on Friday that consumer prices are rising more than 1% excluding fresh food and energy, which shows that the overall inflation trend is improving. Kuroda also said domestic demand will strengthen as the companies and households use their income to increase spending, saying that consumer spending is recovering from a lull earlier this year. Kuroda's optimism about the economy suggests he does not see the need to ease monetary policy, though some economists have said the BOJ expand its quantitative easing when it updates its economic forecasts later this month. (Reuters)

Japan's Finance Minister Aso Voices Doubts on Bank of Japan Monetary Easing. Japan's finance minister voiced skepticism on Friday on whether a fresh round of monetary easing would be launched ahead of a Bank of Japan rate review, citing a surplus of cash in the Japanese economy and weak domestic demand. "The Bank of Japan may not ease policy further any time soon," Taro Aso said in an interview with public broadcaster NHK, adding that the government is not considering a supplementary budget this fiscal year. (Reuters)

Japan PM Abe Presses Firms to Lift Capital Spending to Revive Economy. Prime Minister Shinzo Abe's government on Friday urged Japanese firms to help revive the flagging economy by using their hefty cash piles to boost capital expenditures. The request was made during the first round of talks between cabinet ministers and business leaders on expanding business investments. The move follows Abe's intervention in labor-management talks to press firms to raise wages. Ministry of Finance data showed corporate internal reserves stood at 350 trillion yen (1.9 trillion pounds) in the fiscal year ended March 2015, compared with 300 trillion yen two years earlier. (Reuters)

PBOC Data Suggests Capital Outflows Stayed Strong in September. Chinese financial institutions including the central bank sold a record amount of foreign exchange in September, a sign capital outflows were more severe last month than was previously thought. The offshore yuan fell to a two-week low. A gauge of their foreign-currency assets declined by the equivalent of 761.3 billion yuan ($120 billion), exceeding an August drop of 723.8 billion yuan, People’s Bank of China data showed Friday. Concerns about further yuan depreciation and slowing economic growth, coupled with the prospect of a U.S. interest-rate increase, are spurring outflows of funds. (Bloomberg)

Americas

U.S. Consumer Sentiment Rebounds. U.S. consumer sentiment rebounded strongly in early October, suggesting that the economic recovery remained on track despite headwinds from a strong dollar and weak global demand that have weighed on the industrial sector. The University of Michigan said its consumer sentiment index rose to 92.1 in early October from a reading of 87.2 September. The survey's current conditions sub-index shot up to 106.7 this month from 101.2 in September. The index at current levels has historically been consistent with roughly a 4% annualized rate of consumer spending growth, according to economists. (Reuters)

U.S. Factory Output Drops in Latest Sign of Weak Growth. U.S. manufacturing production fell for the second straight month in September as factories cranked out fewer appliances, computers, and electronics. Factory output declined 0.1%, the Federal Reserve said Friday, following a drop of 0.4% in August. Manufacturers also cut back on production of steel and other metals. The decline suggests that a strong dollar, weak overseas economies, and cautious U.S. consumers are holding back factory output. Overall industrial production, which includes mining and utilities, fell 0.2%, also its second straight decline. (AP)

Banks' Record Treasuries Stockpile Boosts Case for Fed to Hold. U.S. banks are gorging on Treasuries in the latest sign investors expect the Federal Reserve to postpone raising interest rates. Commercial lenders have boosted their holdings to a record $2.15 trillion, based on Fed data. The stake is almost double what China, the biggest U.S. foreign creditor, owns. Treasuries have been advancing since the middle of June, with 10-year yields dipping below 2% this week, on speculation the absence of inflation means rates will stay put. The probability of an increase by the December policy meeting has dropped to 30% from 70% odds at the start of August, according to futures data compiled. (Bloomberg)

Brazil's President Backs Finance Minister, Austerity Drive. Brazil President Dilma Rousseff on Sunday expressed support for Finance Minister Joaquim Levy and said the government will continue efforts to push austerity measures through Brazil's Congress. "Finance Minister Levy stays," Rousseff told reporters, following speculation that the finance chief was getting ready to step down. Levy, a former banker seeking to introduce austerity measures needed to rebalance overdrawn government accounts, faces increasing criticism from ruling party officials who oppose the measures and support economic stimulus instead. (Reuters)

Europe

Eurozone Inflation Confirmed at -0.1% in September. Annual inflation in the Eurozone turned negative in September due to sharply lower energy prices, the EU's statistics office confirmed on Friday, maintaining pressure on the European Central Bank to increase its asset purchases to boost prices. Eurostat said consumer prices in the 19 countries sharing the euro fell by 0.1% in the year to September, dipping below zero for the first time since March, and confirming its earlier estimate. Compared to the previous month, prices were 0.2% higher in September. Core inflation were 0.8% YoY, slightly down from the previous reading of 0.9%. (Reuters)

Bank of England's Forbes Sees UK Rate Hike Sooner Rather Than Later. Bank of England policymaker Kristin Forbes said on Friday that a slowdown in China and other emerging markets should not block a long-awaited British interest rate hike which she said should come "sooner rather than later." Forbes said Britain had limited direct exposure to the problems seen so far in developing nations, even taking into account how they might hit key trading partners such as Germany. Furthermore, Britain's domestically driven growth would continue, albeit more slowly. Forbes said the current wave of widespread pessimism about countries such as China was overstated. (Reuters)

Currencies

Dollar Gains on Fed Rate-Hike, ECB Stimulus Bets. The dollar rose broadly on Friday, as traders reckoned the Federal Reserve might raise interest rates later this year and the European Central Bank may provide more stimulus to help the Eurozone economy. The dollar index was up 0.2% at 94.572 but was still on track for a third straight week of declines, having fallen to a seven-week intraday low of 93.806 on Thursday. Against the euro, the greenback dipped nearly 0.1% at $1.1374, on track for a slim 0.1% on the week. The dollar was up 0.45% at 119.40 yen, recovering from a seven-week low near 118 yen on Thursday. (Reuters)

Commodities

Oil Up on Low U.S. Rig Count; Prices down Sharply on Week. Oil prices rose nearly 2% on Friday as traders covered short positions after four days of sharp losses, and the U.S. oil rig count fell for a seventh week in a row. U.S. crude and Brent racked up their steepest weekly declines in eight weeks after an International Energy Agency report on Tuesday predicted that the global market would remain oversupplied through 2016. U.S. crude settled up $0.88 at $47.26 per barrel, down almost 5% on the week. Brent for December delivery settled up $0.73 at $50.46 a barrel, down about 4% on the week. (Reuters)

Gold Down on Day but Up on Week, Outlook Soft. Gold prices slipped on Friday as a recovering dollar pulled them off a 3.5 month high, but the metal still eked out a weekly rise after gaining in recent sessions on bets against a U.S. interest rate hike. U.S. gold futures for December delivery settled down $4.40, or 0.4%, at $1,182.10 an ounce. Spot gold, or bullion, was down 0.6% at $1,176.06 by 2037 GMT. For the week, both the futures and spot markets rose by about 2%. Silver edged down 0.3% to $16.03 an ounce. Platinum was up 1.5% at $1,016.99 an ounce, while palladium fell 1% to $694.75 an ounce. (Reuters)