MNI Asia Pac Weekly Macro Wrap

EXECUTIVE SUMMARY

JAPAN

• Japan data, outside of only a modest rise in real household spending, was mostly positive this past week. Labor earnings data was particularly encouraging. The BoJ is being cautious around future policy moves, noting time is needed to assess impact of the early August risk off period, but also noting further policy adjustments can be made. Yen has outperformed in the G10 FX space amid lower US yields and softer commodity/equity markets.

AUSTRALIA

• RBA Governor has stuck to her view that it is “premature to be thinking about rate cuts” despite Treasurer Chalmers saying that current rates were “smashing the economy”, which she didn’t comment on. Her tone was unchanged from the August 6 meeting.
• Q2 GDP was close to expectations rising 0.2% q/q to be up 1% y/y, the slowest since the Covid-impacted Q3 2020 and excluding that period Q4 1991. As expected growth was driven by public demand and net exports, while private consumption, inventories and private capex were all drags. The headline result was in line with the RBA’s August forecasts but productivity growth was weaker.

NEW ZEALAND

• NZ Q2 GDP prints on September 19. So far it is looking weak with Q2 retail sales volumes down 1.2% q/q and Q2 merchandise export volumes decreasing 4.3% q/q while imports rose 3.1% q/q signalling a negative contribution from net exports of goods.
• The NZ housing sector remains weak with low levels of consents and prices falling 0.5% m/m in August. Rate cuts and falling prices should drive an improvement in housing affordability.

SHORT TERM RATES

• $-Bloc markets are softer, except for Australia, ahead of the US payrolls report.

CHINA

• Growth expectations remain skewed lower from a sell-side standpoint. Focus remains on support for mortgage holders, next week delivers inflation, trade and aggregate finance data updates.

SOUTH KOREA

• Data outcomes are mostly leaning towards a BOK cut in coming months.

ASIA

• The S&P Global ASEAN manufacturing PMI moderated to 51.1 in August from 51.6, the lowest since April. The slowdown in growth was driven by slower output, orders (especially export orders) and job shedding.
• August CPI data across the region showed either moderating or well contained inflation, which should allow central banks to begin easing after the Fed.

ASIA EQUITY FLOWS

• Tech related markets saw continued outflows this past week, Indonesia & Malaysia markets benefited from the Fed outlook shift.

GLOBAL

• The JP Morgan global PMI fell to 49.5 from 49.7 in July, the second straight month below 50, signalling that the slowdown in global IP growth begun in Q2 likely continued into Q3.

See the attached below for more details.

weekly macro round up (September 6 2024) .pdf