MNI Asia Pac Weekly Macro Wrap

EXECUTIVE SUMMARY

JAPAN

• Japan labour earnings data was mixed earlier in the week, but trends appear favourable. The data, on balance, shouldn’t deter the BoJ from removing further accommodation. Later in week, the focus has been on a sharp yen rebound, which may have reflected fresh FX intervention post the weaker US CPI print.

AUSTRALIA

• NAB June business confidence rose 6 points to +4 but conditions showed a deteriorating economy with all components falling in June, especially employment. The price/cost components also eased with the 3-month rise in the price of finished goods down to its lowest in over three years.
• Westpac consumer confidence remained depressed falling in July due to elevated inflation and rate hike concerns.
• Housing costs continue to grow strongly and if house price inflation picks up again could add to the upward pressure on rates. The RBA is concerned that there could be a wealth effect from the sector.

NEW ZEALAND

• While the RBNZ left rates unchanged at 5.5% as expected, it surprised with its dovish shift. It stated for the first time that “restraint will be tempered”, signalling that the next move is down conditional on inflation moderating as forecasted. Q2 CPI due on July 17 will be watched even more closely now.

SHORT TERM RATES

• STIR markets within the $-bloc have softened across the board over the past 10 days, with New Zealand as the standout performer.

CHINA

• CPI pressures didn’t suggest a firm domestic demand backdrop, while June imports fell, as commodity import volumes eased. This comes ahead of next week’s Q2 GDP data and the 3^rd Plenum where markets will be watching for further growth/policy support signals.

SOUTH KOREA

• The BoK pushed back on easing expectations this week, noting it is paying attention to financial stability risks along with the slowing inflation trend.

ASIA EQUITY FLOWS

• Asian equity flows were mostly positive in the past week, with South Korea remaining the standout.

See the attached below for more details.

weekly macro round up (July 12 2024) .pdf