MNI ASIA PAC Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• Japan data has been better than expected this past week, with the Tankan survey showing large firms painting a resilient activity backdrop for Q2, along with improved Capex intentions. May household spending data surged to multi year highs as well. Earlier next week we get labor cash earnings figures. 

AUSTRALIA 

• Australia saw mixed household spending indicators, with retail sales softer than the household spending measure. The latter will take over from retail sales by the end of this month as the main spending indicator, so it should carry more weight. Still, the RBA is widely expected to cut by 25bps next week. The trade surplus shrunk in May as external trade headwinds grew. 

NEW ZEALAND

• New Zealand saw the ANZ business activity and confidence measures firm in June, but we still remain off cycle highs. Caution still rests on how strong the activity rebound will be. Next week, the RBNZ is seen as on hold.  

SHORT TERM RATES 

• Interest rate expectations across dollar-bloc economies firmer over the past week, led by a 14bp gain in the US. Canada, Australia and New Zealand saw modest firming in the range of 2-6bps.

CHINA 

• China PMIs this past week have been mixed. They suggest not much has changed in the economy in aggregate despite the trade truce with the US. SMEs look to be faring better, but some offset has come from weaker services conditions. 

SOUTH KOREA 

• South Korea saw export momentum improve in June, albeit from a weak base. Inflation pressures were relatively steady, leaving the BoK likely on hold next week. 

ASIA 

• Benign inflation pressures in the Philippines should pave the way for more rate cuts this year. Indonesia posted better than expected trade figures. 

ASIA EQUITY FLOWS 

• Surging Taiwan inflows remain the standout in the region at this stage.