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MNI Asia Pac Weekly Macro Wrap:

A weekly wrap of some of the key themes/macro events for the Asia Pac region.
USCentral Bank NewsHomepageFederal ReserveAPACJapanAustraliaNew ZealandSouth KoreaStoryIndiaChinaNorth AmericaMarkets

Download the Full Report here

Executive Summary:

  • JAPAN
  • Japan data beats for GDP, and continued elevated inflation momentum, is keeping the market focused on the BoJ outlook. Implied market pricing remains firmer than late January. This has aided yen moves this past week, although BoJ Governor Ueda stated that the central bank would buy bonds if yields rose sharply. 

    AUSTRALIA
  • Lower-than-expected Q4 underlying inflation resulted in the RBA’s trimmed mean profile sitting under 3%, the top of the band, allowing the RBA to begin its easing cycle with a 25bp rate cut to 4.10%. However, the move was very cautious and Governor Bullock warned that the market pricing used in the forecasts, which assumed a cash rate of 3.6% in Q4 2025, didn’t bring inflation back to the 2.5% mid-point of the band.
  • The strongest argument to leave rates unchanged was the labour market and the January data confirmed this with 44k new jobs. Deputy Governor Hauser said the data was “incredibly strong”. At the same time, wage inflation moderated in Q4.
     
  • NEW ZEALAND
  • The RBNZ cut rates by 50bp to 3.75% this week, the third consecutive 50bp move, as was unanimously expected. It appears that the MPC is prepared to ease further in 2025, if the economy develops as it expects, but at a slower pace than it has been. The revised OCR path has an additional 50bp of 2025 easing than in November and Governor Orr confirmed that it is looking to cut 25bp in both April and May.
     
  • SHORT TERM RATES
  • $-bloc markets have been mixed over the past week. 
     
  • CHINA
  • We saw further gradual improvement in China house price momentum, while loan prime rates were left on hold as expected. Equity sentiment continues to improve, led by Hong Kong tech. 
     
  • SOUTH KOREA
  • South Korea saw improvement in sentiment readings, but from depressed levels. Export growth appears to have dipped further in February. The BoK meets next week. 
     
  • ASIA
  • Bank Indonesia left rates unchanged at 5.75%, in line with consensus, and remained focused on the IDR. The RBI remains upbeat on the Indian growth outlook, while maintaining a continued focus on liquidity conditions. 
     
  • ASIA EQUITY FLOWS
  • Tech related markets saw outflows towards the end of the week, while India ended run of sharp offshore selling. 
     
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Executive Summary:

  • JAPAN
  • Japan data beats for GDP, and continued elevated inflation momentum, is keeping the market focused on the BoJ outlook. Implied market pricing remains firmer than late January. This has aided yen moves this past week, although BoJ Governor Ueda stated that the central bank would buy bonds if yields rose sharply. 

    AUSTRALIA
  • Lower-than-expected Q4 underlying inflation resulted in the RBA’s trimmed mean profile sitting under 3%, the top of the band, allowing the RBA to begin its easing cycle with a 25bp rate cut to 4.10%. However, the move was very cautious and Governor Bullock warned that the market pricing used in the forecasts, which assumed a cash rate of 3.6% in Q4 2025, didn’t bring inflation back to the 2.5% mid-point of the band.
  • The strongest argument to leave rates unchanged was the labour market and the January data confirmed this with 44k new jobs. Deputy Governor Hauser said the data was “incredibly strong”. At the same time, wage inflation moderated in Q4.
     
  • NEW ZEALAND
  • The RBNZ cut rates by 50bp to 3.75% this week, the third consecutive 50bp move, as was unanimously expected. It appears that the MPC is prepared to ease further in 2025, if the economy develops as it expects, but at a slower pace than it has been. The revised OCR path has an additional 50bp of 2025 easing than in November and Governor Orr confirmed that it is looking to cut 25bp in both April and May.
     
  • SHORT TERM RATES
  • $-bloc markets have been mixed over the past week. 
     
  • CHINA
  • We saw further gradual improvement in China house price momentum, while loan prime rates were left on hold as expected. Equity sentiment continues to improve, led by Hong Kong tech. 
     
  • SOUTH KOREA
  • South Korea saw improvement in sentiment readings, but from depressed levels. Export growth appears to have dipped further in February. The BoK meets next week. 
     
  • ASIA
  • Bank Indonesia left rates unchanged at 5.75%, in line with consensus, and remained focused on the IDR. The RBI remains upbeat on the Indian growth outlook, while maintaining a continued focus on liquidity conditions. 
     
  • ASIA EQUITY FLOWS
  • Tech related markets saw outflows towards the end of the week, while India ended run of sharp offshore selling.