MNI Asia Pac Weekly Macro Wrap

EXECUTIVE SUMMARY

JAPAN

• Inflation data this week should give the BoJ a positive nudge around confidence in hitting the 2% target. BoJ speak suggested further policy tightening can take place, but financial market volatility is a watch point. Japan investor flows into offshore bonds have surged in recent weeks, amid signs of global monetary policy turning (notably in the US).

AUSTRALIA

• Although July headline CPI moderated 0.3pp to 3.5%, it still printed higher-than-expected. The drop was driven by lower electricity prices from government rebates that began in July and will continue to be rolled out in August. Core measures also eased, but without updates to most services components it is difficult to pick the trend. The RBA is likely to remain focused on the quarterly series.

NEW ZEALAND

• Forward-looking ANZ business confidence and activity outlook jumped in August to multi-year highs, but current activity remains very weak. There was little difference in pre- and post-RBNZ meeting responses signalling that the cut was anticipated. Inflation expectations eased but pricing intentions picked up.
• July filled jobs fell 0.1% m/m, the fourth straight monthly decline, to be down 0.5% y/y. Given that employment data is quarterly and the next update is not until November 6 and filled jobs are on the RBNZ’s list of high frequency data, the series is an important gauge of labour market trends.

CHINA

• Focus remains on efforts to support the economy, as sell-side forecasts remained biased lower in terms of the GDP outlook. USD/CNH fell sharply this week, as exporters looked to be offloading foreign currency holdings back into the yuan.

SOUTH KOREA

• Data outcomes this week have argued at the margin for fresh policy support. The government is aiming to provide greater stimulus, particularly for the consumer sector.

ASIA

• BoT Governor Sethaput said that low inflation doesn’t mean deflation and that structural factors persist. Also, he reiterated that policy will be “outlook dependent” but BoT will adjust its stance if needed. The latest Bloomberg survey has 10 of the 27 responses expecting a 25bp cut in Q4 2024, whereas 23 of 26 are forecasting at least one rate cut in Indonesia.

ASIA EQUITY FLOWS

• Tech heavy markets have continued to see outflows in EM Asia over the past week.

GLOBAL

• Global export growth picked up in June but the strength was not broad based and was concentrated in EM, especially China and the rest of non-Japan Asia. Global uncertainties persist for central banks but importantly for Asia trade flows are tentatively improving.

See the attached below for more details.

weekly macro round up (August 30 2024) .pdf