MNI ASIA PAC Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• Japan import prices in May fell to -10.3%y/y, the weakest read since Oct 2023. The chart below plots USD/JPY y/y changes against Japan import prices y/y. If such conditions hold it suggests that the negative impulse to import prices from a stronger yen will fade by the end of Q3.
• There remains a major gap in the stance between the US and Japan around trade/tariff negotiations.

AUSTRALIA 

• NAB business confidence continued to oscillate around zero in May as it has done for around two and half years. It printed at +1.9 after -0.9 in April, the highest since January. However, conditions carried on their downtrend reaching 0.3 in May following 1.6, the lowest since the Covid-impacted August 2020.
• Westpac’s measure of consumer confidence rose 0.5% in June to 92.6 after May’s 2.2% increase boosted by 50bp of RBA easing this year and lower inflation. The index is at its highest since January but still 1.8% below that level as global events have weighed on sentiment.
• Melbourne Institute consumer inflation expectations for June jumped to 5.0% from 4.1%, the highest and first print above 5% in almost two years.

NEW ZEALAND

• NZ card transactions remained soft in May with retail sales falling 0.2% m/m to be up 0.2% y/y after -0.6% y/y helped by positive base effects. While the total rose 0.3% m/m, it had declined the previous four months, and is now up 0.2% y/y. 3-month momentum deteriorated for both series.

SHORT TERM RATES 

• Interest rate expectations across dollar-bloc economies were broadly stable over the past week, with all markets showing net changes of less than 5bps through December 2025.

CHINA 

• It was noted by both sides, after US-China meetings in London, that they would travel back to their respective countries and seek approval from their leaders on implementing the Geneva framework.
• China’s May CPI inflation remained weak at -0.1% y/y, slightly better than consensus expectations, while core picked up 0.1pp to 0.6% y/y, the highest since January. Producer prices deteriorated further falling 3.3% y/y after -2.7% in April and the weakest since July 2023.

ASIA 

• Consumer sentiment moderated to multi-month lows in both Indonesia and Thailand in May as both domestic conditions and global uncertainty weighed on confidence.

ASIA EQUITY FLOWS 

• Asia equity flows were positive for South Korea and Taiwan yesterday, but modestly negative for the rest of the region. In the past week, inflows remain strong for South Korea and Taiwan.

GLOBAL 

• Container ship tracking data suggest that trade flows have picked up again following the April 2 US announcement of extensive reciprocal tariffs as traders take advantage of the 90-day delay which expires July 8. Most major routes to the US have seen the number of vessels return to around average.