MNI ASIA PAC Weekly Macro Wrap:

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Executive Summary:

• JAPAN
• Japan PPI data released this week is still suggesting a supportive CPI backdrop. Yen underperformed after last week’s solid gains. JGB yields continued to track higher. 
   
• AUSTRALIA
• Australia may get an exemption from the current US tariffs and avoid being targeted as it is one of the few countries that the US has a surplus with, it accounts for only 0.5% of US imports and 2% of aluminium imports and less than that for steel.
• Confidence remained lacklustre with Westpac consumer sentiment flat in February and January NAB business confidence continuing to oscillate around zero.
• The moderation in NAB price/cost components seems to have stalled and February MI inflation expectations jumped 0.6pp to 4.6%. This data is unlikely to drive the RBA’s decision but it may make the Board cautious.
   
• NEW ZEALAND
• Card spending data and the RBNZ’s Q1 measure of inflation expectations were consistent with another 50bp of easing on February 19.
   
• SHORT TERM RATES
• $-Stir markets have been firmer over the past week, except for New Zealand.
   
• CHINA
• China news and data flows has been light. This week we argued that further yield compression between China and Japan may come more so from the Japan leg. 
   
• SOUTH KOREA
• Uncertainty continues over the next BoK meeting outcome. Onshore calls remain for fiscal stimulus, while unemployment data at the end of this week was better than forecast. 
   
• ASIA
• In the Philippines the BSP surprised by leaving rates on hold. Indian data supported the case for more rate cuts. 
   
• ASIA EQUITY FLOWS
• Asia equity flows have been mixed the past week, but India has seen continued heavy selling. 
   
• GLOBAL
• The focus was again firmly on US tariff developments with Canada again at the fore with 25% tariffs on steel and aluminium signed. The US has low trade taxes by global standards and its average tariffs on the EU and China are lower than theirs on the US. On this basis, a number of Asian countries are likely to be concerned by reciprocal tariffs, but the issue is very complicated.
• Tariffs are not the preferred protectionist tool by the world with subsidies far outweighing taxes. All harmful interventions, as measured by Global Trade Alert, have been trending lower following the 2022 peak. 

PLEASE FIND THE FULL REPORT HERE: weekly macro round up (February 14 2025) .pdf