MNI EXCLUSIVE: Local Analysts Share Insight Into China's H2 Steel Demand

The TYU5 range has been 111-03 to 111-06 during the Asia-Pacific session. It last changed hands at 111-05, down 0-01 from the previous close. 

• The US 2-year yield has edged lower trading around 3.854%, down 0.01 from its close.
• The US 10-year yield has moved lower trading around 4.37%, down 0.01 from its close.
• The 10-year yield has moved back towards its pivot within the wider range 4.10% - 4.65%, expect supply around 4.35% first up.
• Treasury Secretary Scott Bessent on X: “Today in a CNBC interview, I called for a review of the Federal Reserve. It is my belief that the central bank should conduct an exhaustive internal review of its non-monetary policy operations. Significant mission creep and institutional growth have taken the Fed into areas that potentially jeopardize the independence of its core monetary policy mission.”
• “While I have no knowledge or opinion on the legal basis for the massive building renovations being undertaken on Constitution Avenue, a review of the decision to undertake such a project by an institution reporting operating losses of more than $100 billion per year should be conducted.”
• 2WAY on X: “Donald Trump’s appointment of Jerome Powell to the Federal Reserve “was probably a mistake,” says the economist Stephen Moore. “But I don't think Trump is going to replace Powell. I think he'll wait him out. He may name his successor sometime in the next month or two or three, just to put pressure on him. There's no love loss between those two right now. It's like they want a divorce from each other.”
• Data/Events: Philly Fed Non-Man., Richmond Fed Manu. Index & Business Conditions

Fig 1: 10-Year US Yield Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

Bloomberg container ship tracking data show that there was an increase in the number of vessels sailing to the US from most major trading partners through June. Exporters likely frontloaded shipments ahead of the July 9 planned imposition of delayed reciprocal tariffs. While they have been postponed again to August 1, this frontloading has resulted in the start of normalisation in sailings in July and looks likely to distort H2 trade data for the US, China, Europe and other Asian countries.

Container ship departures to the US

• Departures to the US from China remain above the average number from 2023 to end January 2025. The 30-day average to July 21 was around 20 vessels more than this average. While from the EU-6 (Belgium, France, Germany, Italy, Netherlands & Spain) it was just below, but from Japan and Taiwan slightly higher and significantly higher from Korea.
• Q1 saw a sharp rise in annual growth in merchandise export values to the US from most countries in order to beat tariff deadlines. Many have seen a contraction in Q2, including China, Korea and Japan as well as Canada & Mexico, while Taiwan remained strong up 76.4% y/y in June. ASEAN countries also continue to see robust shipments to the US. 

Container ship departures to the US

Source: MNI - Market News/Bloomberg Finance L.P.

RBNZ-dated OIS pricing is 5-9bps softer across meetings versus Monday’s pre-CPI levels.

• NZ CPI rose less than economists expected in Q2. Headline CPI rose 0.5% q/q 2.7% y/y (estimate +0.6% and 2.8%). Tradeables rose 0.3% q/q, less than forecast, while non-tradeables were in line at 0.7% q/q.
• 21bps of easing is priced for August, with a cumulative 38bps by November 2025 versus 16bps and 30bps prior to the data.

Figure 1: RBNZ Dated OIS Current vs. Pre-CPI (%)

Source: Bloomberg Finance LP / MNI