MNI Asia Pac Weekly Macro Wrap

EXECUTIVE SUMMARY

JAPAN:

• Japan national April CPI was broadly in line with market expectations. Y/Y momentum eased further, while a slowdown in services inflation was also evident. Still JGB yields hold near recent highs, as speculation continues around the BoJ policy outlook and bond buying program ahead of the June policy meeting.

AUSTRALIA:

• The RBA May meeting minutes were neutral and consistent with rates on hold for some time. Upside risks to inflation seem to be offset by downside risks to growth. A rate hike had been discussed.
• Consumer confidence remained depressed with inflation continuing to be the main concern. Westpac notes though that the May 14 budget was “reasonably well received”.

NEW ZEALAND:

• The RBNZ left rates at 5.5% as expected but it was a hawkish hold with a rate hike given “real consideration” and CPI and OCR projections revised higher. But with inflation still forecast to be within the band by year-end the MPC decided that it could be patient.

SHORT TERM RATES:

• STIR markets within the $-bloc have shown varied performances over the past three weeks. Australia and Canada have outperformed, while the US remains unchanged. In contrast, New Zealand is much firmer, with most of the movement occurring after this week’s RBNZ policy decision.

CHINA:

• Positive equity momentum has waned from China and Hong Kong stock indices. Weakness in property and tech indices has been evident. USD/CNH continues to trend higher, but the rate of ascent remains very modest.

SOUTH KOREA:

• As expected, the BoK left rates on hold this week at 3.50%, although the door remains open for a cut in the second half of this year. Data outcomes continue to suggest exports will remain a key driver of the growth backdrop. Household inflation expectations remain sticky.

INDONESIA:

• Bank Indonesia left rates at 6.25% to support the rupiah and ensure inflation stays within the target band. At the same time, it retained its stimulatory macroprudential policy to boost lending and growth. It expects one Fed cut before year end and we believe it won’t cut until afterwards.

See the attached below for more details.

weekly macro round up (May 24 2024) .pdf