Malaysia

September Domestic PPI Up 0.1%. Malaysia's domestic Producer Price Index (PPI) for September 2015 increased slightly by 0.1% to 102.9 from 102.8 in August, the Statistics Department said Friday. The fall was due to the increase in both local production and import price indices of 1.3% and 0.2% respectively. YoY comparison showed that the PPI for the domestic economy in September decreased by 5.1%, with the local production index dropping by 7.0% while the import price index rose 1.1%. The import price index went up 0.2% during the month under review against August 2015, and increased by 1.1% YoY. (Bernama)

RAM Sees Malaysia's Deficit Target as Realistic. Malaysia will be able to meet its reduced deficit target of 3.1% that was made in the Budget 2016 in spite of a low oil price environment, according to RAM Ratings Bhd. “From a sovereign rating angle, we like that the government is committed to fiscal consolidation and remains so,” RAM’s head of sovereign ratings Esther Lai said in an interview. “For us at RAM we are using US$55 per barrel so there is a little bit of a buffer there. But all being said, the low oil price environment may still make the fiscal consolidation path more difficult,” Lai said. Lai added that the government also must be careful to ensure that fiscal consolidation does not choke growth. (The Star)

Asia

BOJ Refrains from Adding Stimulus Even as Inflation, Growth Wane. The Bank of Japan kept its monetary policy unchanged as Governor Haruhiko Kuroda bets that the current level of stimulus is still sufficient to drive prices to his 2% inflation target. Kuroda has maintained the view in recent months that a strong economic cycle is intact, with high corporate profits and a tight labor market bringing price gains, once the effect of low energy costs is discounted. The BOJ released a brief statement after its meeting Friday showing that the board voted 8-1 to continue expanding the monetary base at an annual pace of 80 trillion yen ($664 billion). (Bloomberg)

BOJ Postpones 2% Inflation Target in Wake of Low Oil Prices. The Bank of Japan on Friday postponed its forecast for reaching its 2% inflation target, saying that the timing of hitting that goal depended on oil prices. The bank’s board now expected prices to rise 0.1% this fiscal year, down from 0.7%, and 1.4% next year. The bank had previously said it saw inflation rising to meet the target around the six months through September 2016. This has now been pushed back to the six months through March 2017. BOJ Gov. Haruhiko Kuroda maintained that the bank will not hesitate to adjust policy if there are threats to the price trend. (Bloomberg)

 Japan Government Mulling Extra Budget of over $25 Billion. The Japanese government is considering compiling a supplementary budget of over 3 trillion yen ($25 billion) to build nursing-care facilities and aid farmers, who face tougher competition as the country prepares to join the trans-Pacific trade pact, the Nikkei newspaper reported on Friday. The government may increase the size of spending if Japan's July-September GDP data, due out on November 16, shows the economy is worsening enough to warrant more fiscal stimulus, the Nikkei said without citing sources. The government will not issue new bonds to finance the spending, the paper said. (Reuters)

Taiwan Narrowly Avoids Recession. Taiwan narrowly dodged a recession in the third quarter even as the economy contracted for the first time since the global financial crisis. GDP contracted a worse than expected 1.0% in the July-September period from a year ago, preliminary figures from the government showed on Friday. That compared with a forecast of a 0.6% decline in a poll. On a QoQ basis, GDP grew an anaemic 0.21% in the third quarter, the Directorate General of Budget, Accounting and Statistics said. Taiwan's government also announced a stimulus package to help boost domestic consumption. The cabinet said the package could add T$15.4 billion (US$669 million) to GDP. (Reuters)

India Eyes Bankruptcy Reform. A group of government-appointed advisors has recommended sweeping changes to India's outdated and overburdened bankruptcy system, aiming to modernize a process that takes several years and costs investors and taxpayers billions. The changes would be the most ambitious overhaul to date of rules governing the liquidation or revival of companies in India, a country with no single bankruptcy code and where competing laws, unclear jurisdictions and inadequate resources can leave cases languishing for decades. (Reuters)

Thai Economic Conditions Recover Slightly in September. Thailand’s economic activity recovered a tad in September, as private spending picked up slightly and tourist arrivals inched higher. The Bank of Thailand said Friday that the country’s private consumption index increased 0.4% from a year earlier in September, reversing from a 1.4% YoY drop in August. Thailand’s PCI rose 0.5% on a monthly basis. According to the central bank’s statement, although private consumption indicators improved, purchases of durable goods declined from the preceding month, suggesting that households remained cautious in their spending. (WSJ)

Saudi Arabia Credit Rating Cut by S&P after Oil Prices Sink. Saudi Arabia’s credit rating was cut by Standard & Poor’s, which said the decline in oil prices will increase the budget deficit in a country that relies on energy exports for 80% of its revenue. S&P cut the sovereign rating one level to A+, the fifth-highest classification, as it said the biggest OPEC producer’s deficit will increase to 16% of GDP this year. The nation’s credit outlook is negative as the decline in oil prices makes it difficult to reverse the fiscal deterioration, S&P said in a statement. The country is rated Aa3 by Moody’s Investors Service, the equivalent of one step higher than S&P’s new grade. (Bloomberg)

China, Japan, South Korea Pledge Economic Cooperation. The leaders of South Korea, Japan and China pledged to work toward greater economic integration at their first joint meeting in over three years on Sunday, as they work to ease tensions stemming from Japan's wartime past. South Korean President Park Geun-hye, Japanese Prime Minister Shinzo Abe and Chinese Premier Li Keqiang also said they would to resume annual meetings which had been suspended since 2012 amid disagreements over history and territory. Park said she agreed with Abe and Li to work toward the conclusion of a 16-nation free trade area as well as a separate three-way free trade deal that has been on the table since 2013. (Reuters)

China’s October Official Manufacturing PMI Unchanged at 49.8. An indicator of Chinese factory activity showed an unexpected contraction in October, denting hopes that the world’s second-largest economy will post a fourth-quarter turnaround. China’s official manufacturing PMI remained unchanged at 49.8 in October from a month ago, the China Federation of Logistics and Purchasing said on Sunday. This is its third consecutive month below the 50 mark. The October PMI missed the median 50.0 forecast in a poll of 11 economists. (WSJ)

USA

U.S. Avoids Debt Default as Congress Passes Fiscal Plan. Congress passed a two-year bipartisan budget plan that avoids a catastrophic default on U.S. debt, increases spending on domestic and defense programs. The 64-35 Senate vote early Friday, following House passage two days earlier, sends President Barack Obama a bill that will extend U.S. borrowing authority until March 2017. The agreement likely frees Obama of protracted fiscal battles with congressional Republicans for the rest of his term. The agreement diminishes, but doesn’t eliminate, the odds of a government shutdown because lawmakers still must work out details before current funds expire Dec. 11. (Bloomberg)

Consumer Spending Records Weakest Gain in 8 Months. Consumer spending in September posted the smallest gain in eight months, a sign that shoppers grew cautious at the end of the third quarter. Americans increased their spending just 0.1%, the Commerce Department said Friday, the weakest showing since they cut spending in January. Income growth inched up 0.1%, which was the smallest amount in four months. Wages and salaries were flat following two months of big gains. Still, spending totals can be influenced by price changes, and falling gasoline costs last month were a big reason for the weaker spending figure. Adjusted for inflation, consumers spent 0.2% more in September. (AP)

Consumer Sentiment Improved in October. Americans are feeling more confident this month, a good sign for an economy driven by consumer spending, according to a University of Michigan survey. The university said Friday that its index of consumer sentiment rose to 90 after dropping to 87.2 in September from 91.9 in August. Households felt more favorably about their financial prospects than at any time since 2007. Their expectations for inflation are at the lowest level in a quarter century. And another gauge of consumer spirits - the Conference Board's consumer confidence index - fell to 97.6 this month from a nine-month high 102.6 in September, the business group reported Tuesday. (AP)

Paychecks Rise at Modest 0.6% Pace in Q3. U.S. workers' paychecks grew at a moderate rate over the summer, showing little sign of accelerating from the sluggish growth that has persisted since the recession ended. The employment cost index, which tracks wages, salaries and benefits, rose 0.6% in the July-September quarter from the April-June quarter, the Labor Department said Friday. That is stronger than the second quarter's 0.2% gain. Yet in the past 12 months, pay and benefits have risen just 2%. That's below the 3.5% to 4% typical of a healthy economy. The modest annual gain suggests the job market is not yet back to full health. (AP)

Europe

Eurozone Inflation Zero in October. Eurozone prices were unchanged YoY in October as expected, a first estimate by Eurostat showed on Friday. The Eurostat estimated that consumer prices in the 19 countries sharing the euro were unchanged this month against levels 12 months earlier, after falling 0.1% YoY in September. The main factor that kept the overall price index from rising was energy, the cost of which was 8.7% lower this month than a year ago. Core inflation, was 0.9% in October, up from a downwardly revised 0.8% in September. Unemployment decreased to 10.8% in September from a revised 10.9%, Eurostat said in a separate release. (Reuters)

ECB Will Do What is Needed to Keep Inflation Target on Track - Draghi. The European Central Bank (ECB) is ready to do whatever it takes to keep its mid-term inflation target on course, the head of the bank Mario Draghi said in a newspaper interview published on Saturday. "We will see if further stimulus is needed. The question is open," he said. He said inflation in the euro zone was expected to remain close to zero, if not negative, at least until the beginning of next year. "Starting from the middle of next year and through all 2017, thanks also to the delayed effect of exchange rate depreciation, we expect inflation to gradually increase," he said. (Reuters)

Russia Holds Benchmark Rate for Second Month on Inflation. Russia’s central bank left its benchmark interest rate unchanged at a second consecutive policy meeting after the monetary authority warned that inflation expectations have continued to increase. Policy makers left the one-week auction rate at 11%, the Bank of Russia said in a statement on Friday. Twenty of 39 economists predicted a cut to 10.50%, with the other 19 forecasting unchanged rates. The Bank of Russia has cut the rates by a cumulative 6 percentage points after it raised the benchmark to 17% last December to ward off the worst ruble crisis since 1998. (Bloomberg)

Currencies

Dollar Falls on Profit-Taking, Commodity Currencies Rise. The dollar fell on Friday, reducing its monthly gain against a basket of currencies, as traders who favored commodity-linked currencies booked profits on gains tied to the U.S. Federal Reserve's unexpected hint it may raise rates in December. The dollar index fell 0.3% to 96.995. For October, the dollar was up 0.6%, for its second straight monthly gain. The Aussie climbed 0.9% to $0.7129. The yen rose in the wake of Bank of Japan's decision to leave monetary policy unchanged. The dollar slipped 0.4% at 120.66 yen. The euro was last at $1.0993, up 0.2%. Against the dollar, sterling was up 0.7% at $1.5418. (Reuters)

Ringgit Fall Due to US Easing Monetary Policy - Economist. The depreciation of the Malaysian ringgit was due to the United States easing its monetary policy and its process of economic recovery, said the Lead Economist of the World Bank's Development Research Group, Norman Loayza. "My perspective is, this is not a country-specific issue, the depreciation is because the US economy is recovering," he said on Friday. (Bernama)

Hong Kong Dollar Peg Intervention Swells to Biggest Since 2009. The Hong Kong Monetary Authority bought the most U.S. dollars in six years this month to keep its currency within the permitted trading band amid signs the city will raise interest rates. The de facto central bank purchased $10.7 billion in October at HK$7.75 a dollar, the strong-end of the allowable range, according to data compiled. That took the aggregate balance of Hong Kong’s banking system to HK$418 billion ($54 billion) on October 29, the highest in data going back to 1997. Under the linked exchange-rate system, Hong Kong will follow the U.S. if it raises interest rates. That would put appreciation pressure on the city’s currency. (Bloomberg)

Yuan Gains Most Since March as PBOC Looks to Ease Capital Curbs. The yuan surged the most since March as China’s central bank said it will look at starting a trial program in the Shanghai free trade zone to allow domestic individuals to directly buy overseas assets. The yuan rose 0.56%, the most since March 19, to 6.3216 a dollar as of 4:12 p.m., in Shanghai, according to China Foreign Exchange Trade System prices. The Shanghai FTZ will also expand yuan cross-border use, according to a plan posted on the central bank website. This came after the State Council, or cabinet, said last week that China will gradually promote yuan convertibility under the capital account in the Shanghai FTZ. (Bloomberg)

Commodities

Oil Rises on U.S. Rig Count. Oil prices rose on Friday, finishing higher for the week and month as well, after another decline in the U.S. oil rig count indicated domestic crude production could fall in coming months. Prices also got a boost from separate data showing U.S. oil output in August fell to third lowest figure this year. Brent settled up $0.76, or 1.6%, at $49.56 a barrel. It rose 3% on the week and 2% for October. U.S. crude futures rose by $0.53, or 1.1%, to $46.56, gaining 3% on the week and 4% on the month. Oil prices had trended higher since Wednesday's 6% rally, sparked by a smaller-than-anticipated build in U.S. crude. (Reuters)

Gold Falls to 3-Week Low. Gold fell to a three-week low on Friday, extending two days of losses and heading for its biggest weekly drop since August on the chance the U.S. Federal Reserve may still raise interest rates this year. Spot gold was down 0.4% at $1,141.36 an ounce at 1923 GMT, after slipping to its lowest since October 9 at $1,139.11, just above the 100-day moving average. U.S. gold for December delivery settled down 0.5% at $1,141.40 an ounce. Silver prices are on track for the biggest monthly rise since January, up 7%. Silver was down 0.2% at $15.53 an ounce on Friday. Spot platinum was down 0.8% at $981.75 an ounce, while palladium was up 0.7% at $672.75. (Reuters)