Malaysia’s inflation slowed to a one-year low in Jan, giving the central bank room to extend a pause in monetary policy tightening as the faltering global economy threatens growth. The Consumer Price Index (CPI) for Jan 2012 rose by 2.7% to 104.5 compared with 101.8 in the same month last year. The Department Of Statistics Malaysia said the CPI increased by 0.3 per cent when compared with Dec 2011. (Business Times)
Economy: BNM's reserves at RM425.7bn
Bank Negara Malaysia's (BNM) international reserves amounted to RM425.7bn (equivalent to US$134.4bn) as at Feb 15, 2012. The central bank said that the reserves position is sufficient to finance 9.3 months of retained imports and is 4.1x the short-term external debt. (Bernama)
US: Distressed properties help boost home sales
Sales of previously owned US homes rose in Jan to the highest level since May 2010 as investors took advantage of lower prices to buy distressed properties. Purchases climbed 4.3% to a 4.57m annual rate, less than forecast, from a revised 4.38m pace in Dec that was slower than previously estimated, a report from the National Association of Realtors showed. Distressed properties made up the largest portion of all purchases since Apr. (Bloomberg)
US: Construction jobs rebound on remodeling
Construction hiring is picking up as Americans invest in renovating their homes amid signs that the worst of the housing-market declines may be over. The number of people working in residential remodeling grew 5.8% in Dec to 250,700 from a year earlier, based on preliminary data released Feb 3 by the Bureau of Labor Statistics. This was the highest growth for these jobs -- which account for about 5% of construction employment -- since Dec 2006, before the housing bubble burst. (Bloomberg)
EU: ECB preparing to close liquidity floodgates
The ECB wants its second offer of cheap ultra-long funds next week to be its last, putting the onus back on governments to secure the euro zone's longer-term future. Powerful members of the central bank's 23-man governing council are privately hoping demand at the Feb 29 auction will fall well short of the 1trn euros (837.8bn pounds) some expect, backing their view that it should be the last. Central bank sources say they are worried that banks will become too reliant on ECB funds, removing the incentive to restart lending between themselves. (Reuters)
EU: Manufacturing and services sector contract
European services and manufacturing output unexpectedly shrank in Feb as the euro-area economy struggled to rebound from a contraction in the fourth quarter. A euro-area composite index based on a survey of purchasing managers in both industries dropped to 49.7 from 50.4 in Jan, London-based Markit Economics said in an initial estimate today. Economists had forecast a reading of 50.5, according to the median of 16 estimates in a Bloomberg News survey. A reading below 50 indicates contraction. (Bloomberg)
Euro: Weak PMI fans recession fears
Business activity across the euro area contracted unexpectedly this month, according to a Purchasing Managers Index (PMI) released Wednesday, raising doubts about the 17-nation region’s ability to avoid a recession that could further complicate the sovereign debt crisis. The preliminary composite PMI fell to 49.7 in February from 50.4 last month. A reading of less than 50 signals a contraction in activity. (Marketwatch)
France: Inflation holds near 3-year high on energy, tax rises
France’s inflation rate held near a three-year high in January as President Nicolas Sarkozy’s government increased sales tax rates on some goods and services and energy prices climbed. Consumer prices rose 2.6% from a year earlier, compared with increases of 2.7% in November and December. (Bloomberg)
UK: BOE’s Bean says Greek deal doesn’t end disorderly outcome risk
Bank of England Deputy Governor Charlie Bean said agreement on a second bailout for Greece may not be enough to end the debt crisis and countries in the euro- area periphery must reduce debt and improve competitiveness. He said while the agreement between the Greek government and the euro-area authorities is certainly welcomed, there still remains a possibility that events could unfold in a disorderly and damaging fashion at some stage in the future. The deputy governor said a disorderly outcome in the euro area would hit the UK.’s export and financial links, reduce confidence and lead companies and consumers to hunker down and postpone spending. (Bloomberg)
UK: BOE splits as Posen pushes with miles for larger boost to asset purchases
Bank of England policy makers Adam Posen and David Miles were defeated in their bid to raise stimulus by 75bn pounds ($118bn) as the majority argued such a move might provoke alarm on the economy. 7 of the 9-member Monetary Policy Committee, including Governor Mervyn King, voted to raise the asset- purchase target by 50bn pounds to 325bn pounds, according to minutes of the Feb. 8-9 meeting published today in London. They argued a larger increase risked sending a signal that the committee thought the economic situation was weaker than it was. (Bloomberg)
Greece: Crisis raises new fears over credit-default swaps
Greece’s debt restructuring is dragging credit-default swaps back into the spotlight. To get maximum debt relief, Greece needs to have as many qualifying bonds as possible join the restructuring. Toward that end, Greece may insert something called a collective action clause into bonds issued under Greek law. If the clause is inserted and then invoked, all bondholders will be forced to take a haircut, making the exchange involuntary. That would set off the default swaps. The official decision on whether a default swap has been activated is made by the International Swaps and Derivatives Association, an industry body. The Greek government said Tuesday that it was sending a bill to Parliament that, if passed, would insert the clause into bonds issued under Greek law, which make up more than 90% of the country’s bonds. (New York Times)
Greece: Fitch slash ratings, indicates near-term default highly likely
Fitch slashed its rating for Greek sovereign debt to “C” from “CCC,” indicating that default is highly likely in the near term. The downgrade comes just after the country secured a second bailout from its creditors and the subsequent announcement by the Greek government that private investors holding Greek debt would be forced to accept a debt swap, in which they exchange their bonds for lower-value debt. In Fitch's opinion, the exchange, if completed, would constitute a 'distressed debt exchange' (DDE) in line with its criteria and consequently Tuesday's announcements set in motion the agency's process for reviewing Greece's issuer and debt securities ratings. Fitch said it would review its stance on Greece again once the debt swap had been completed. (Reuters)
China: Manufacturing data show risk of deeper slowdown on exports
China’s manufacturing may shrink for a fourth month in Feb, indicating the world’s secondbiggest economy remains vulnerable to a deeper slowdown as Europe’s crisis caps exports and the housing market cools. The preliminary 49.7 reading of an index from HSBC Holdings Plc (HSBA) and Markit Economics today compared with a final 48.8 in Jan. A number below 50 points to a contraction. Jan and Feb economic data are distorted by a weeklong holiday. (Bloomberg)
Taiwan: 4Q GDP shrinks on quarter, government cuts 2012 GDP forecast
Taiwan's government lowered its economic growth forecast for this year, the second time in a month, citing the global slowdown and fragile consumer sentiment, after confirming the island had slipped into a technical recession in the fourth quarter of last year. It now expects GDP to grow 3.85% this year, less than its previous estimate of 3.91%. For the three months ended December, Taiwan's GDP fell 0.15% from the previous quarter. (Bloomberg)
Australia: Wage growth quickens as resource boom benefits workers
Wages in Australia accelerated last quarter at the fastest pace in a year as workers benefited from the nation’s resource bonanza. The wage price index, which measures hourly pay rates excluding bonuses, rose 1% in the final three months of 2011 from the prior quarter, when it advanced 0.7%. (Bloomberg)
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