ASIA STOCKS: China Ends Week with Rally

ACGBs (YM -3.0 & XM -3.5) are weaker and at session cheaps on a data-light session.

• Cash US tsys are flat to 2bps cheaper, with a steepening bias, in today's Asia-Pac session after yesterday's twist-flattener. Today's US calendar will see MBA Mortgage Applications.
• Cash ACGBs are 3bps cheaper with the AU-US 10-year yield differential at +3bps.
• The bills strip is weaker, with pricing -2 to -5.
• RBA-dated OIS pricing is modestly firmer across meetings today. A 25bp rate cut in August is given a 98% probability, with a cumulative 62bps of easing priced by year-end (based on an effective cash rate of 3.84%).
• Tomorrow, the local calendar will see Trade Balance data.
• The AOFM plans to sell A$1000mn of the 3.00% 21 November 2033 bond on Friday.

Thai inflation printed below expectations in July with headline down 0.7% y/y after -0.25% due to lower global oil and local vegetable prices. It has been trending lower through 2025 and July was the fourth consecutive negative. Core was slightly lower than consensus at 0.8% y/y down from 1.1%. The Bank of Thailand left rates at 1.75% in June to allow it to time future easing. It has cut rates 75bp this cycle and with broad based moderation in inflation, it could ease again on August 13.

Thailand CPI y/y%

• The Trade Policy and Strategy Office said that there isn’t deflation as consumer demand increased and prices rose for many items. It projects Q3 CPI to fall 0.5% y/y but return to positive territory in Q4.
• Food inflation moderated to 0.8% y/y from 1.6% in May driven by moderation across most items but especially a 9.4% y/y drop in fruit & vegetables.
• Non-food inflation was down at -1.7% y/y from -1.45% with all major components negative except recreation & education. Energy was down 7.3% y/y from -6.3% while transport & comms was -3.9% after -3.2%.
• USDTHB is slightly lower today at 32.37 and is down 0.9% since the last BoT decision on June 25. The THB NEER has also risen for four consecutive months with August up 0.5% m/m so far. With the stronger currency tightening financial conditions and inflation below target, an August rate cut is on the cards.

Thailand THB

Source: MNI - Market News/LSEG

Some of Asia's pharma stocks took a hit today as President Trump aimed his tariff sights firmly in their direction.  Pharma shares in Australia, Japan, South Korea and India are down by 2-3% after Trump said in an interview that he will be putting tariffs on Pharmaceuticals.  

Following yesterday's better than expected GDP, Indonesia's Jakarta Composite has consolidated above 7,500 over 25% off the March lows.  

A government initiative to provide free preschool education has given Chinese childcare related stocks a boost with rises of +2-4% .

• The Hang Seng posted modest gains of +0.18% as it attempts to trade above 29,500.  The CSI 300 is up +0.18%, Shanghai Comp is up +0.27% and Shenzhen up +0.55%.
• The Nikkei has had a strong day rising +0.60% after Tuesday's gains of +0.64%.
• The TAIEX in Taiwan is the worst regional performer, down -0.77%
• The KOSPI followed the TAIEX down by -0.18%.  
• Malaysia's FTSE KLCI couldn't follow up on yesterday's gains of +0.76% and is lower by -0.16%.
• The Jakarta Composite is one of the best performers in July but could only rise marginally today by +0.08%.
• The FTSE Straits Times is down -0.07% and the PSEi in the Philippines up +0.62%.  
• The NIFTY 50 in India declined -0.30% yesterday and has opened marginally lower this morning.