MNI ASIA PAC Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• As widely expected, the BoJ left its policy rate unchanged at 0.50%, which was a unanimous decision of 9-0 by the board. The economic outlook was downgraded though in terms of both lower GDP and inflation forecasts. It also notes prices and growth risks for the 2025 and 2026 fiscal years rest to the downside. BoJ-dated OIS pricing has softened by 1-5bps compared to pre-MPM levels. 

AUSTRALIA 

• Q1 headline and underlying inflation printed 0.1pp higher than expected but the trimmed mean at 2.9% y/y is below the top of the RBA’s 2-3% target band for the first time since Q4 2021, which is likely to mean another 25bp rate cut in May. The RBA should also be reassured by the moderation in services inflation.
• Opinion polls continue to point to a return of the incumbent Labor government following Saturday’s federal election but it remains unclear whether it can hold onto its majority. The average of surveys in the second half of the month is at 52.5% to 47.5%.

NEW ZEALAND

• It is likely that the ANZ April business survey was impacted by US tariff announcements, as it noted that “forward-looking activity indicators were sharply lower in the late-month responses”.
• Filled jobs rose 0.2% m/m in March but are still down 1.5% y/y after being flat and down 1.6% y/y. However, the 3-month annualised rate at 0.4% turned positive for the first time since April 2024, signalling that Q1 employment may be flat to slightly higher on the quarter when data is released on May 7.

SHORT TERM RATES 

• Rate expectations across the $-bloc have remained broadly unchanged through December 2025 over the past week.

CHINA 

• China’s official PMI manufacturing slipped into contraction in April. The details showed new orders were down to 49.2, back to lows from Jan of this year. New export orders slumped to 44.7, which is fresh lows back to end 2022. The tariff impact is clearly in play here, with anecdotes of sharp declines in China to US hipping highlighted in recent weeks.

SOUTH KOREA 

•  South Korean data showed better than expected headline export growth for April, but day count effects were in play. CPI for April was a touch above expectations but should stop further BoK easing. 

ASIA 

• The Bank of Thailand (BoT) cut rates 25bp to 1.75% as expected in a 5 to 2 vote. The move was driven by a lower growth outlook with risks skewed to the downside, tight financial conditions and inflation expected to stay below the bottom of the 1-3% band.

GLOBAL 

• Shipping rates have been trending lower since mid-2024 as threats to Red Sea shipping dissipated and much of the related jump has now been unwound. They have taken another leg down since January this year though, as threats to global trade volumes from US tariffs weigh on prices charged.