MNI Asia Pac Weekly Macro Wrap

EXECUTIVE SUMMARY

JAPAN

• Japan activity data was mostly positive this week, pointing to a resilient economic backdrop. Inflation for July was close to expectations, with headline holding comfortably above the BoJ’s 2% target. Governor Ueda, appearing before parliament, stated that current policy rates are far below likely neutral levels for the Japanese economy, signalling scope for further policy adjustments.

AUSTRALIA

• The August RBA meeting minutes stated that the increase in excess demand estimates could have prompted an immediate rate rise but the Board decided that keeping rates on hold longer than the market expected would achieve the required tightening in financial conditions.
• Australia’s underlying trimmed mean measure of inflation is above other OECD countries, both those who have begun to ease and those who have not. Thus, it is unsurprising that the RBA remains “vigilant” to upside inflation risks and discussed a rate hike at its August meeting.
• The preliminary Judo Bank composite PMI recovered somewhat in August to 51.4 from 49.9, signalling a pickup in growth.

NEW ZEALAND

• Q2 real NZ retail sales fell more than the market forecast. This underscores the view point of quite a soft economic backdrop for NZ at the moment.

SHORT TERM RATES

• STIR markets within the $-bloc have seen small net movements over the past week, with the market awaiting the upcoming Jackson Hole Symposium.

CHINA

• There were further various announcements this week around efforts to support the struggling property market. Sentiment hasn’t shifted much though. Bond markets remain the other focus point for policymakers.

SOUTH KOREA

• The BoK left rates on hold as expected this week. Tweaks to the forecast profile open the door for a cut in Q4 though. Fiscal stimulus is expected next week to boost consumption.

Rest Of Asia

• Both Bank Indonesia and Bank of Thailand left rates unchanged at their August meetings. There was little change to BI’s tone and it will remain focused on strengthening the rupiah in Q3 but there is still scope for a Q4 2024 rate cut. Whereas, BoT sounded more concerned regarding growth, inflation and financial stability but still sees the policy rate as “consistent” with its outlook.

ASIA EQUITY FLOWS

• The general trend around Asian equity flows is that the continue to lag the broader recovery in the indices seen since August 5.

See the attached below for more details.

weekly macro round up (August 23 2024) .pdf