Malaysia: S&P rating cut due to methodology
S&P’s decision to cut Malaysia’s sovereign rating last week was prompted by a change in its ratings methodology and its view on the country’s creditworthiness remains unchanged. The agency had lowered Malaysia’s local currency rating to A from A+ on 27 July. “We define the foreign currency rating first, and then how much more the credit can notch up to the local currency rating,” S&P’s director of Asian sovereign ratings Takahira Ogawa said. “If you look at Malaysia, already 30% of the government (debt) securities are owned by foreigners. It is getting more and more difficult for us to have higher differentiation between the local and foreign currency rating,” Ogawa added. (Bloomberg)
China: Non-manufacturing industries grew in July, survey shows
A Chinese non-manufacturing index rose for the first time in 3 months in July, indicating some industries are withstanding the government’s campaign to cool inflation in the world’s fastest growing major economy. A purchasing managers’ index rose to 59.6 from 57.0 in June. (Bloomberg)
Australia: Home building approvals, house prices drop on rates
Australian home-building approvals unexpectedly declined in June for a third straight month and house prices fell, prompting the local currency to pare gains as traders reduced bets on an interest rate increase this year. The number of permits granted to build or renovate houses and apartments slid 3.5% from May, when they dropped a revised 6.3%. (Bloomberg)
Australia: RBA holds key rate at 4.75% to gauge US, China slowdown
The Reserve Bank of Australia kept the benchmark interest rate unchanged, saying that while its board considered boosting borrowing costs, it was prudent to hold off because of a clouded global economic outlook. Overnight cash rate target was held at 4.75% for a record eight straight meeting. (Bloomberg)
UK: Construction index was little changed in July at 53.5
An index of UK construction was little changed in July from the previous month, slipping marginally to 53.5 from 53.6 in June. Residential construction shrank for a second month, while commercial and civil engineering expanded. Confidence among building firms “improved slightly”. (Bloomberg)
US: Consumer spending unexpectedly falls as hiring slumps
US consumer spending unexpectedly dropped in June for the first time in almost two years and savings climbed, adding to evidence that the slump in hiring is hurting household confidence. Purchases declined 0.2% after a 0.1% gain the prior month. Incomes grew at the slowest pace since Nov. (Bloomberg)
US: Senate approves debt-ceiling legislation
Just hours before a potential default on the nation’s debt obligations, the Senate approved an increase to the US debt ceiling that also reduces planned budget deficits, and President Barack Obama signed the legislation into law. By a 74 to 26 vote, the Senate approved a proposal that increases the USD14.3trn debt limit by up to USD2.4trn in two stages, and by the Congressional Budget Office’s tally, reduces deficits by USD2.1trn over a decade. Yet even with the cuts, the US is projected to increase the national debt by USD7trn or more over the same span. (Marketwatch.com)
US: Moody's confirms US triple-A rating
Moody's late Tuesday confirmed the US' triple-A rating following the increase in its debt ceiling. However, the rating agency assigned a negative outlook on the rating. "The initial increase of the debt limit by USD900bn and the commitment to raise it by a further USD1.2trn to USD1.5trn by year-end have virtually eliminated the risk of such a default, prompting the confirmation of the rating at Aaa," Moody's said. It also warned that the negative outlook indicates that there is a risk of a downgrade if the US fiscal environment weakens further and its economic outlook deteriorates significantly. (Marketwatch.com)
U.S: Obama signs debt-limit plan to avoid default at deadline. President Barack Obama signed a debt-limit compromise that prevents a U.S. default on the day the Treasury had warned the nation's borrowing authority would expire, ending a months-long debate that reinforced partisan divisions over federal spending. The Senate voted 74-26 for the measure, which raises the nation's debt ceiling until 2013 and threatens automatic spending cuts to enforce USD 2.4tr in spending reductions over the next 10 years. It won backing from 45 Democrats, 28 Republicans and one independent. The House passed the plan yesterday. (Source: Bloomberg)
US: Private-sector jobs up 114,000 in July, ADP says
Payrolls at US companies increased by a tepid 114,000 in July, suggesting modest job growth continued in the fragile economy, according to the ADP employment report released Wednesday and marking the 18th straight month of job growth. The ADP report covers only private-sector employment, and not government jobs. (Bloomberg)
US: Services growth slowest since Feb 2010
Service industries expanded in July at the slowest pace in 17 months as orders and employment cooled, indicating the biggest part of the US economy had little spark to begin the second half of the year. The Institute for Supply Management’s index of non-manufacturing businesses, which covers about 90% of the economy, dropped to 52.7 from 53.3 in June. (Bloomberg)
US: Mortgage applications increase 7.1% on refinancing
Mortgage applications in the US climbed last week, led by a boost in refinancing as borrowing costs fell to the lowest level in more than eight months. The Mortgage Bankers Association’s index rose 7.1% in the period ended 29 July from the prior week. The group’s refinancing measure climbed 7.8% while the purchase gauge increased 5.1%, the biggest gain in 11 weeks. (Bloomberg)
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