MNI Asia Pac Weekly Macro Wrap

EXECUTIVE SUMMARY

JAPAN

• Japan Q1 GDP was noticeably weaker than expected, weighed by softer consumer and business spending. Still, there is hope Q2 shows better momentum. The BoJ outlook and bond buying plans remain a key market focus point. JGB yields sit just off recent highs, remaining more elevated relative to US yields in recent weeks.

AUSTRALIA:

• The April labour market data showed a 0.2pp increase in the unemployment rate to 4.1% but it was impacted by people taking time off before starting a new job as it was school holidays. Looking through the volatility in the data, the labour market remains tight but continues to ease gradually in line with the RBA’s May thinking. Q1 wages were slightly lower than RBA forecasts.
• The FY25 federal government budget was released and included a FY24 surplus but then deeper deficits over the subsequent years. Many don’t agree that the budget is disinflationary but the Treasurer has said that inflation could be below target by year-end. The RBA’s response will be watched closely.

NEW ZEALAND:

• RBNZ inflation expectations eased in Q2 with the 2-year ahead rate now 2.3%, which should reassure the RBNZ when it meets on May 22. But April preliminary CPI data for 45% of the basket suggested upside risks for Q2.
• Data continue to point to slowing demand with April card spending showing consumers are cutting back on discretionary spending to pay for the essentials.

CHINA:

• China activity data underscores the narrow nature of the current economic backdrop, with strength in the industrial sector evident compared to softer retail spending. Housing market indicators remain weak, as policy efforts look to intensify in this space. We have seen a sharp rebound in China property related equity indices in recent weeks.

ASEAN

• The Philippines central bank held rates steady this week, as widely expected. However, the ground work is being laid for easier policy settings in H2.

GLOBAL:

• Non-Japan Asia ex China core CPI continued to trend lower in April while headline was steady. US inflation moderated but the euro area’s was steady. Global costs, such as energy and shipping, that had been disinflationary have been more variable. Some are currently highly dependent on geopolitical developments and so bringing inflation down the last part to targets may be slow.

See the attached below for more details.

weekly macro round up (May 17 2024) .pdf