MNI EUROPEAN OPEN: BoJ Maintains The Status Quo

EXECUTIVE SUMMARY

• BOJ KEEPS YCC, ECONOMIC ASSESSMENT UNCHANGED - MNI
• HIGH TECH FOCUS WON’T SUPPORT H2 GROWTH - CHINA ECONOMISTS - MNI
• CHINA MEDIA SEE ASYMMETRIC CUT IN BANKS’ BENCHMARK LENDING RATES - BBG
• AUSTRALIA SIGN-ON BONUSES HIGHLIGHT RBA’S LABOUR MARKET FEARS - BBG

Fig. 1: Still Accommodative BoJ Sees Yen Miss Out On USD Weakness

Source: MNI - Market News/Bloomberg

U.K.

FISCAL: Britain’s tax system is so complicated it has become an “obstacle to economic dynamism” and needs to be simplified, an influential committee in Parliament concluded. A review by the Treasury Committee found that there are more than 1,180 separate tax reliefs that can cause such perverse outcomes some people may end up poorer by taking a job or getting a pay rise. (BBG)

EUROPE

TECH: The European Commission is planning to ban equipment from Chinese vendors Huawei Technologies Co. and ZTE Corp. from its own internal telecommunications networks, people familiar with the matter said. (BBG)

UKRAINE: The F-16s that NATO is sending to Ukraine aren’t likely to arrive in time to help with Kyiv’s current offensive. The used planes won’t be enough to turn the tide in the air war against Russia, either. The alliance has a different message in mind. (BBG)

U.S.

FED: Former Treasury Secretary Lawrence Summers said that Federal Reserve policymakers seemed to settle on an inconsistent set of actions this week based on internal dynamics at the US central bank. (BBG)

GEOPOLITICS: Former US Secretary of State Henry Kissinger said he believes military conflict between China and Taiwan is likely if tensions continue on their current course, though he still holds out for dialogue that will lead to deescalation — as he’s been urging. (BBG)

OTHER

JAPAN: The Bank of Japan board on Friday decided unanimously to keep yield curve control policy and pledged to continue patiently with monetary easing amid high economic and financial market uncertainty. The BOJ also kept the forward guidance for the policy rates and pledged to take additional easing measures if necessary. "The BOJ will patiently continue with monetary easing while nimbly responding to developments in economic activity and prices as well as financial conditions,” the Board said in a statement. “By doing so, it will aim to achieve the price stability target of 2% in a sustainable and stable manner, accompanied by wage increases,” it said. (MNI)

JAPAN: The Bank of Japan board Friday left its overall economic assessment unchanged, noting the country's economy had picked up, "despite being affected by factors such as past high commodity prices.” The BOJ also maintained the near-term economic recovery scenario, but warned it expects downward pressure due to past high commodity prices and a slowdown in the pace of recovery overseas. The Bank repeated that the y/y rate of increase in CPI (all items less fresh food) will likely decelerate toward the middle of fiscal 2023, but did not say the rise would fall below its 2% target. It also left its near-term outlook unhanged, noting the economy will likely recover moderately toward around the middle of fiscal 2023. (MNI)

AUSTRALIA: Australian employers are offering signing bonuses to entice workers, with companies like Wesfarmers Ltd. and Ramsay Health Care Ltd. reporting up to 8% in wage growth, highlighting a tight labor market and complicating the Reserve Bank’s inflation fight. (BBG)

TAIWAN: The top US liaison to Taiwan asked the opposition’s presidential candidate about how he would navigate relations with Beijing if he wins next year’s election, according to people familiar with the meeting, as polls show a tight race between the key parties. (BBG)

CHINA

GROWTH: hina’s economy continued an unbalanced recovery in May, with economists telling MNI that policymakers' focus on flagship high-tech industrial upgrading may not offset weakness in the private sector and real estate during the second half of the year, as the country targets GDP growth of about 5%. High-tech industrial fixed-asset investment rose by 12.8% y/y in May, with medical and communication equipment up 18.8% and 16.1%, according to National Bureau of Statistics data on Thursday. (MNI)

POLICY: China’s banks are likely to see a deeper cut in their 5-year benchmark lending rate next week as policymakers seek to lower medium to long-term borrowing costs for corporates as well as mortgage rates, Securities Times cites Li Chao, economist from Zheshang Securities, as saying in a front-page report. (Securities Times)

POLICY: China will roll out more stimulus to support a slowing economy this year, but concerns over debt and capital flight will keep measures targeted at shoring up weak demand in the consumer and private sectors, sources involved in policy discussions said. (RTRS)

YUAN: China’s yuan will likely buck its weakening trend in the second half of this year as the economy continues to recover and the Fed’s rate hikes are expected to end, Securities Daily reported. (BBG)

SOEs: The Government will encourage state-owned enterprises to use capital markets to improve competitiveness, enhance allocation of resources and achieve high-quality development, according to a notice from the State-owned Assets Supervision and Administration Commission. The notice said SOEs should use mergers and acquisitions to enhance business models and asset value. Investors are expecting SOEs to focus M&A activity on industrial integration of strategic emerging industries, according to one analyst. (Securities Daily)

CONSUMPTION: The Ministry of Commerce (MOFCOM) will coordinate policy support for home appliance consumption, according to MOFCOM Spokesperson Shu Jueting. Speaking at a recent press conference, Shu said local governments planned to invest over CNY2.5 billion to promote consumption, with a focus on rural households replacing and upgrading older appliances. Nationwide, officials are planning 300 large-scale promotion activities and will make efforts to upgrade the after sales service industry. Shu added consumers that upgrade to newer appliances will contribute to the green-energy transition. (MNI)

CHINA MARKETS

PBOC Injects Net CNY40 Bln Via OMOs Friday

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Flag	Country	Event
16/06/2023	0700/0300			US	St. Louis Fed's James Bullard
16/06/2023	0800/1000	**		IT	Italy Final HICP
16/06/2023	0830/0930	**		UK	Bank of England/Ipsos Inflation Attitudes Survey
16/06/2023	0900/1100	***		EU	HICP (f)
16/06/2023	1145/0745			US	Fed Governor Christopher Waller
16/06/2023	-			EU	ECB de Guindos at ECOFIN Meeting
16/06/2023	1230/0830	**		CA	Wholesale Trade
16/06/2023	1230/0830	*		CA	International Canadian Transaction in Securities
16/06/2023	1300/0900			US	Richmond Fed's Tom Barkin
16/06/2023	1400/1000	**		US	U. Mich. Survey of Consumers