MONEY MASTER

The ongoing  US government shutdown , now entering its  third week , is draining roughly  US$15 billion a day  from the economy, Treasury Secretary  Scott Bessent  warned on Wednesday — calling for Democrats to “be heroes” and work with Republicans to reopen the government. Shutdown Drag Hits Economic Momentum Speaking at a  CNBC event during the IMF and World Bank meetings , Bessent said the shutdown has begun to “cut into muscle” of the US economy. “We believe that the shutdown may start costing up to US$15 billion a day,” he said. He cautioned that the deadlock is becoming the  biggest impediment to America’s investment boom , particularly as the country rides a wave of  AI-driven and manufacturing-led growth . “There is pent-up demand, but then President Trump has unleashed this boom with his policies. The only thing slowing us down here is this government shutdown,” Bessent said. Policy Support and Investment Boom Bessent argued that...

Key Takeaway Economists expect Bank Negara Malaysia (BNM) to maintain the Overnight Policy Rate (OPR) at  2.75% through 2026 , citing resilient domestic demand, easing trade tensions, and a healthy labor market. While a minority still sees scope for one more cut, the consensus is for policy stability ahead. Why OPR Stays Put Lagged impact of July cut : The July pre-emptive cut to 2.75% is expected to continue supporting growth into 2026. Domestic resilience : Spending activity, strong labor markets, and sustained infrastructure investment underpin growth. External relief : Signs of easing tariff and trade tensions reduce pressure for further easing. Research House Views MBSB Research : July’s cut likely a one-off; sees no start of an easing cycle. Suggests targeted sectoral support over broad rate moves. RHB Research : OPR steady as long as GDP remains in the  4%–4.8% range  and inflation contained. HSBC : Expects BNM to stand pat, awaiting clarity on RON95 subsidy ration...

 Market Context Japan’s  20-year government bond auction on Tuesday  is in sharp focus as investors weigh the risk of  rising fiscal spending  and reduced central bank support. The ruling coalition’s  loss of its upper house majority  has raised speculation of fiscal expansion and a potential leadership race. The  Bank of Japan  is gradually scaling back its massive JGB purchases, leaving a  demand gap  in the market. Global backdrop: super-long debt under pressure worldwide.  German 30-year yields  hit a 14-year high last week. Why the 20-Year Maturity Matters Yields on Japan’s 20-year bonds remain near last month’s  highest levels since 1999 , despite a slight easing. Strategists note it’s a  “tricky tenor” : neither a benchmark like the 10-year nor an ultra-long like the 30- or 40-year. Investors in the  past seven auctions are underwater  on a mark-to-market basis. Auction Dynamics Bid-to-cover rati...

  Key Takeaways: Fiscal Strength Decline : Moody’s has highlighted a  multi-year decline  in the fiscal strength of the US, pointing out that the  sovereign rating  outlook was downgraded to negative in late 2023. The firm cites  higher interest rates as a significant factor that has reduced  debt affordability , which is crucial for the country’s fiscal health. Rising Debt Costs : The  US Treasury yields  have sharply increased since 2020, leading to  higher interest payments , expected to rise to about  30% of revenue  by 2035, up from  9%  in 2021. This  growing debt burden  is projected to severely limit the  US fiscal flexibility , making it harder for the country to manage its finances. Declining Debt Affordability : Moody’s warns that while the US’s global economic strength and the central role of the  dollar  and  Treasury bonds  remain vital, the  declining debt afforda...

South Korea's government has announced plans to increase budget spending to US$510 billion for 2025, marking a cautious approach to fiscal expansion as the country grapples with an aging population and slowing economic growth. The budget, detailed by the finance ministry, reflects a commitment to fiscal discipline under the conservative Yoon Suk Yeol administration, which has prioritized improving the nation's fiscal position since taking office. Key Takeaways: Moderate Spending Increase : The government has set its total expenditure for 2025 at 677.4 trillion won (US$510.5 billion), a 3.2% increase from 2024. While this represents a slight increase compared to the 2.8% rise in 2024, it falls short of the previously projected 4.2% growth for 2025. This modest increase underscores the administration's focus on fiscal sustainability, particularly in the face of long-term challenges like an aging population and sluggish economic growth. Focus on Fiscal Responsibility : The Yoo...

The Ministry of Finance (MOF) emphasized that tax collection and government subsidies, incentives, and assistance are significant components of Malaysia's fiscal position. Key Points: Fiscal Focus: Deputy Finance Minister Lim Hui Ying highlighted the importance of focusing on tax collection and government aid to capitalize on Malaysia's current stable fiscal position. Revenue and Expenditure: Tax collection contributed approximately RM229 billion, or 72.8%, of the government's revenue of RM315 billion for 2023. Government subsidies, incentives, and assistance amounted to around RM80 billion, or 19.7%, of the total government expenditure of RM406 billion. Targeted Subsidies: Lim stated that targeted diesel subsidies are expected to save the government RM4 billion per year, strengthening the fiscal position and reducing aid leakage. GST Implementation: The government currently does not plan to implement the Goods and Services Tax (GST). The focus will be on improving the exis...