MNI Asia Pac Weekly Macro Wrap

EXECUTIVE SUMMARY

JAPAN

• The BoJ delivered a hawkish rate hike this week. The market has revised higher its rate outlook. This, coupled with softer US data, which is fueling Fed expectations and global growth concerns, is continuing to drive yen gains.

AUSTRALIA

• Key Q2 CPI printed close to the RBA’s May forecasts with headline in line but trimmed mean slightly higher. This appears to have taken an August rate hike off the table but the RBA is still likely to remain vigilant to “upside risks to inflation”. Domestic inflation remained elevated but showed some hopeful signs of moderating.
• June retail sales were stronger than expected with consumers taking advantage of mid-year sales. However, Q2 sales volumes contracted again showing that household consumption remains pressured.
• The Q2 merchandise trade surplus narrowed about $4bn from Q1 and with Q2 trade prices showing export prices sinking while import prices unexpectedly rose, there is a risk of a net export contraction.

NEW ZEALAND

• June filled jobs fell for the third consecutive month and were 0.2% lower in June than March. Q2 employment prints on August 7 and filled jobs are suggesting that jobs growth is likely to moderate further.
• The July ANZ business survey showed that businesses expect conditions to improve relative to now going forward but current activity continues to deteriorate compared to a year ago signalling further weak GDP.

SHORT TERM RATES

• STIR markets within the $-bloc have softened dramatically over the past week, with Australia and Canada outperforming.

CHINA

• China bond rates continued to move lower in yield terms this past week. Softer PMI data weighed and raised prospects of further policy stimulus. USD/CNH is lower though, aided by the Fed outlook and firmer yen levels.

SOUTH KOREA

• South Korea data was mixed the past week. On balance it doesn’t suggest a BoK rate cut in August, but local yields have still followed US Tsys sharply lower this past week.

ASIA

• Despite Indonesian manufacturing contracting for the first time in almost three years, the July S&P Global ASEAN PMI was relatively stable at 51.6 indicating moderate industrial growth in the region. Orders growth increased but was domestically-driven as export orders fell again with shipping having an impact.
• Indonesian June headline CPI moderated to its lowest in over two years while core was relatively stable at a low level. Inflation is well contained and should not trouble Bank Indonesia as it focuses on FX stability.

GLOBAL

• May CPB data showed that global trade and IP continue to grow but at sluggish rates, while the outlook is also lacklustre.

See the attached below for more details.

weekly macro round up (August 2 2024) .pdf