MNI ASIA PAC Weekly Macro Wrap:

Executive Summary:

• JAPAN
• Japan wages and household spending data surprised on the upside this past week. This, along with hawkish BoJ rhetoric, has seen BOJ pricing firm. Yen has been the best G10 performer in the FX space against the USD. 
   
• AUSTRALIA
• Total household spending volumes rose 1.4% y/y in Q4 up from 0.2% in Q3 signalling a pickup including a solid quarterly rise in the national accounts version due on March 5. Monthly consumption data are pointing to a recovery. Australia’s December exports were boosted by an increase in both volumes and prices of key commodities. They were also supported by a 92.1% y/y increase in exports to the US with 2024 14% higher but China remains by far Australia’s main export destination.
   
• NEW ZEALAND
• Building spare capacity in the NZ labour market is helping to bring wage inflation down. In Q4 full-time employment fell 0.3% q/q to be down 1.7% y/y after -0.9% y/y in Q3 and hours worked fell 0.5% q/q and 1.9% y/y after -1.1% y/y. The unemployment rate rose 0.3pp to 5.1%, in line with consensus and RBNZ projections, while underutilisation rose 0.5pp to 12.1%. Another 50bp rate cut on February 19 is expected.
   
• SHORT TERM RATES
• Based on historical patterns, it would be highly unusual for the RBA not to follow through on market expectations, especially since it has made no attempt—officially or unofficially—to steer expectations away from a cut, as it has done in the past.
• In the past week STIR markets are little changed apart from Canada. 
   
• CHINA
• China PMIs generally painted a softer picture for growth momentum in early 2025. CNY focus remains on tariffs, while over the weekend we get January inflation data, a key input into the policy outlook. 
   
• SOUTH KOREA
• Uncertainty has risen over the near term BoK outlook. This week’s CPI data surprised on the upside, while Governor Rhee stated a Feb rate cut is not a done deal. 
   
• ASIA
• The S&P Global ASEAN manufacturing PMI fell to 50.4 in January from 50.7 remaining just in growth territory but slowest in almost a year. Q4 Indonesian GDP was as expected rising 0.5% q/q and 5.0% y/y up from 4.9% in Q3 leaving 2024 up 5% in line with 2023. Q4 was driven by domestic and export growth.
• As expected, the RBI cut rates, but kept the bias neutral disappointing some in the market. 
   
• ASIA EQUITY FLOWS
• Equity flows are mixed for the region, but YTD flows remain negative. 
   
• GLOBAL
• Mexico and Canada are highly exposed to the US and have reached deals to delay 25% tariffs by 30 days. China didn’t come to an agreement and a 10% trade tax has been imposed on all US imports from China with China retaliating. The key though is that the US is less exposed to trade restrictions than all the regions it is targeting.

PLEASE FIND THE FULL REPORT HERE: weekly macro round up (February 7 2025) .pdf