MNI Asia Pac Weekly Macro Wrap

MNI (SYDNEY) - EXECUTIVE SUMMARY

JAPAN 

• Data this week has been mixed, wage and spending trends suggesting there is no rush for the BoJ to tighten further in the near term. The PPI was stronger than forecast though. The yen has fallen around 6.5% versus the USD since mid-September, which, if this trend continues, may bring BoJ focus back onto the weaker FX issue. 

AUSTRALIA 

• The RBA minutes reported that the Board discussed scenarios that would result in both tightening or easing at its September meeting.
• NAB reported a pick up in both business conditions and confidence in September and an easing in price and cost pressures, although labour cost increases remain above average. Westpac consumer confidence was also positive jumping to its highest since rate hikes began in May 2022.

NEW ZEALAND

• The RBNZ increased its pace of easing by cutting the OCR 50bp to 4.75% today, as expected. The MPC felt that “restraint” could be lessened as inflation is “within” the 1-3% target range and approaching the mid-point. It seemed to opt for an increase in the pace of easing to “avoid unnecessary instability” in the economy and markets. It noted that policy is still restrictive though.

SHORT TERM RATES 

• Year-end official rate expectations across the $-bloc have shown a mixed performance over the past week. The US has firmed by 20bps, New Zealand has softened by 10bps, while Canada and Australia have seen little change.

CHINA 

• All eyes remain on China stimulus measures, with a key press conference taking place tomorrow from the MOF on fiscal policy. We have more meetings at the start of next week. Local equities sit comfortably off recent highs. 

SOUTH KOREA 

•  The BoK started its easing cycle today, but aggressive follow up action is unlikely as the central bank keeps one eye on financial stability issues. 

ASIA 

• The RBI kept rates on hold as widely expected, with the key rate held at 6.50%. The central bank did shift its long held policy stance from 'withdrawal of accommodation' to neutral. This is seen as the first step towards the central bank ultimately cutting the policy rate.
• Thai inflation may have troughed but it remains very low. Inflation is expected to pick up towards the end of the year with the government forecasting October to rise to 1.25%. Government pressure on the Bank of Thailand to cut rates continues.
• The MAS in Singapore is expected to keep policy setting steady at Monday’s policy meeting. 

ASIA EQUITY FLOWS 

• Equity flows have generally remained negative for the past week. 

See the attached below for more details.weekly macro round up (October 11 2024) .pdf