MNI Asia Pac Weekly Macro Wrap

EXECUTIVE SUMMARY

JAPAN

• Tokyo May CPI was close to expectations, with headline rebounding back above 2% y/y. Still, some core measures showed slower momentum versus April, and outside of utilities inflation outcomes were fairly modest in the month. Still, JGBs maintain their downtrend. This past week JGB yields have made fresh cyclical highs.

AUSTRALIA:

• Not only did April CPI print above expectations but headline and underlying inflation ticked up signalling that the RBA is on hold for now. Inflation has been moving sideways to slightly higher over 2024 and heading towards the RBA’s upwardly revised 3.8% forecast for Q2.
• Retail sales values for April were soft rising 0.1% m/m and while they have been moving sideways for some time, spending per capita and volumes are contracting.

NEW ZEALAND:

• The new NZ government presented its first budget which showed a deterioration in the fiscal position across the forecast horizon with the first surplus pushed back a year. The RBNZ may be concerned re the timing of spending cuts compared with the promised tax cuts which may see early 2025 easing delayed.
• The latest ANZ business survey showed activity and price/cost measures easing in May.

CHINA:

• China official May PMIs were weaker than expected, particularly for manufacturing, which fell back into the contraction zone. The data is disappointing in the sense the manufacturing/industrial side had been showing more positive trends compared to other parts of the China economy.

ASIA FX:

• Asia FX trends remain closely aligned with US yield developments. Most Asia currencies have still managed modest gains for May, although PHP has been a sharp underperformer.

ASIA EQUITY FLOWS:

• Asia equity flows have lost momentum, particularly in tech sensitive areas.

See the attached below for more details.

weekly macro round up (May 31 2024) .pdf