MNI Asia Pac Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• Japan national CPI continued to show firmer core price trends. Activity figures have been mixed this past week. The sharp rise in onshore JGB yields has also been in focus, although we look to be ending the week a little calmer.  

AUSTRALIA

• The RBA cut rates 25bp to 3.85%, the lowest in two years, as was widely expected. It was a consensus decision following a discussion of unchanged rates vs a cut and then when the latter was chosen quickly the dialogue became between 25bp or 50bp of easing. 25bp was the strongest argument.
• The preliminary May S&P Global composite PMI showed a moderation in growth with the index easing to 50.6 from 51, the lowest since February. The quarterly averages are showing that after a slight pickup in private sector growth in Q1 it likely slowed a bit in Q2.

NEW ZEALAND

• The NZ government continues to expect the budget to be in surplus in FY29, while the timing is unchanged the amount has been revised down and is flat as a share of GDP. From FY26 deficits were revised higher due to weaker revenue as growth was revised down near-term and unemployment higher.
• NZ posted its third consecutive monthly merchandise trade surplus in April at $1426.04mn up from $794.43 to drive a further narrowing in the YTD deficit to $4812mn from $6250mn, the lowest since October 2021. The improvement has been the result of export growth outpacing imports.

SHORT TERM RATES 

• $-Bloc markets are little changed over the past week, except for Australia, which saw a 17bp softening in expected year-end rate. 

CHINA

• April's house price data continued to highlight the challenges for authorities in achieving a recovery in the multi-year downturn in house prices. April's new house prices decline increased from March to -0.12%.
• April data releases showed limited impact from the trade war.
• The 1- and 5-year Loan Prime Rates were reduced in line with expectations. 

SOUTH KOREA

• South Korea's early May trade data released today showed that exports are falling, particularly to the US. A delegation from South Korea’s trade ministry will visit the US over May 20-22 to hold follow-up discussions to reach a compromise before US President Donald Trump’s tariffs on Korea's exports resume in July.

ASIA

• Singapore's economy expanded +3.9% YoY in the first quarter, marginally higher than early estimates. As South East Asia's most open economy Singapore's GDP result was widely anticipated as an indicator as to the current impact of the trade war. Indian PMIs painted a resilience growth backdrop. 

ASIA EQUITY FLOWS 

• Asia's major markets are staring at another strong week of inflows with almost $2bn recorded to yesterday.