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MNI ASIA PAC Weekly Macro Wrap:

A weekly wrap of some of the key events/macro themes from the Asia Pac region
USCentral Bank NewsHomepageFederal ReserveAPACJapanAustraliaNew ZealandStoryChinaNorth AmericaMarkets

Executive Summary:

  • JAPAN
  • BoJ efforts to curb the size of its balance sheet have stepped up. This could have implications for local asset markets and the yen, but also, global asset markets.
  • Tokyo January inflation saw a rise in headline pressures, but core outcomes were close to expectations. There was a little bit of softness in services inflation as well. 
     
  • AUSTRALIA
  • Q4 CPI data showed underlying measures trending towards the top of the RBA’s 2-3% band but still “some way” from the 2.5% mid-point. The data should increase the RBA’s “confidence that inflation is moving sustainably towards target” as annual rates printed 0.2pp below its November forecasts. Our PCA measure of core CPI is within the band. But core services inflation ticked up 0.1pp to 4.2% y/y.
  • Expectations of a February 18 rate cut are growing following the lower-than-expected CPI. Updated projections at this meeting and the timing of 2.5% trimmed mean inflation will be important for its decision.
     
  • NEW ZEALAND
  • RBNZ chief economist Conway said this week that further easing of the OCR as “signalled in November” should be possible given easing domestic price intentions and inflation expectations.
  • While NZ ANZ business confidence and activity outlook eased in January they remain elevated, signalling some reduction in optimism following RBNZ easing. The inflation measures were higher across the board though, which will require monitoring but are highly unlikely to derail a 50bp rate cut on February 19 but may slow easing going forward as rates approach neutral.
  • The US became NZ’s second most important export destination in 2024 overtaking Australia.
     
  • SHORT TERM RATES
  • $-Bloc markets have softened over the past fortnight led by Canada.
     
  • CHINA
  • Both the manufacturing and non-manufacturing PMIs disappointed in January with the former falling into contractionary territory. In addition, industrial profits fell. USD/CNH is probing higher amid renewed tariff risks from US President Trump. 
     
  • ASIA
  • The Philippines fourth quarter GDP print of +5.2% YoY was in line with Q3 putting the full year result at +5.6%, below the government’s full year target of 6%-6.5%.


PLEASE FIND THE FULL REPORT HERE: weekly macro round up (January 31 2025) .pdf

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Executive Summary:

  • JAPAN
  • BoJ efforts to curb the size of its balance sheet have stepped up. This could have implications for local asset markets and the yen, but also, global asset markets.
  • Tokyo January inflation saw a rise in headline pressures, but core outcomes were close to expectations. There was a little bit of softness in services inflation as well. 
     
  • AUSTRALIA
  • Q4 CPI data showed underlying measures trending towards the top of the RBA’s 2-3% band but still “some way” from the 2.5% mid-point. The data should increase the RBA’s “confidence that inflation is moving sustainably towards target” as annual rates printed 0.2pp below its November forecasts. Our PCA measure of core CPI is within the band. But core services inflation ticked up 0.1pp to 4.2% y/y.
  • Expectations of a February 18 rate cut are growing following the lower-than-expected CPI. Updated projections at this meeting and the timing of 2.5% trimmed mean inflation will be important for its decision.
     
  • NEW ZEALAND
  • RBNZ chief economist Conway said this week that further easing of the OCR as “signalled in November” should be possible given easing domestic price intentions and inflation expectations.
  • While NZ ANZ business confidence and activity outlook eased in January they remain elevated, signalling some reduction in optimism following RBNZ easing. The inflation measures were higher across the board though, which will require monitoring but are highly unlikely to derail a 50bp rate cut on February 19 but may slow easing going forward as rates approach neutral.
  • The US became NZ’s second most important export destination in 2024 overtaking Australia.
     
  • SHORT TERM RATES
  • $-Bloc markets have softened over the past fortnight led by Canada.
     
  • CHINA
  • Both the manufacturing and non-manufacturing PMIs disappointed in January with the former falling into contractionary territory. In addition, industrial profits fell. USD/CNH is probing higher amid renewed tariff risks from US President Trump. 
     
  • ASIA
  • The Philippines fourth quarter GDP print of +5.2% YoY was in line with Q3 putting the full year result at +5.6%, below the government’s full year target of 6%-6.5%.


PLEASE FIND THE FULL REPORT HERE: weekly macro round up (January 31 2025) .pdf