MNI ASIA PAC Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• Japan Q2 GDP beat expectations, aided by a stronger capex spending and modestly positive private consumption growth. The authorities remain cautious around the outlook, while recognizing the continued recovery. 

AUSTRALIA 

• The RBA made the unanimous decision to cut rates 25bp to 3.60%, as expected, with a larger move was not discussed. Around another 75bp of easing is assumed in the updated staff forecasts which results in underlying inflation at around the 2.5% band mid-point from H2 2025.
• The July labour market data printed in line with consensus but also showed some normalisation in key data after June’s deterioration. There was also a clear trend to more full-time jobs and hours signalling that demand was robust in the month.
• The Q2 WPI rose 0.8% q/q leaving annual inflation at 3.4% y/y after a recent trough at 3.2% in Q4 2024 and 4.1% in Q2 2024. Public sector quarterly wage gains outpaced the private sector for the third consecutive quarter. 2025 to date is showing some stabilisation in wage inflation.

NEW ZEALAND

• July NZ retail card transactions rose 0.2% m/m to be up 1.2% y/y, signalling a gradual recovery in nominal consumption. It has been trending higher since the March trough of -1.8% y/y. The RBNZ is likely to cut rates on August 20 as inflation is in the band and the economic recovery remains subdued.

SHORT TERM RATES 

• Interest rate expectations across the $-bloc were largely unchanged over the past week, despite several major data releases and a policy move by the RBA.

CHINA 

• President Donald Trump extended a pause of sky-high tariffs on Chinese goods for another 90 days into early November, stabilizing trade ties between the world’s two largest economies.
• The July release over the weekend for China's inflation data confirmed more of the same as deflationary pressures remain. July CPI release was 0.0%, from 0.1% in June and PPI was unchanged at -3.6%.
• July activity data, along with new loans, was weaker than forecast, casting a shadow over the early Q3 outlook. 

SOUTH KOREA 

• Korea's exports dropped 4.3 percent from a year earlier in the first 10 days of this month, due in part to sluggish shipments to the United States on an escalating tariff scheme.

ASIA 

• The Bank of Thailand cut rates 25bp to 1.5% in line with consensus. the decision was unanimous as the MPC felt easing was needed to loosen financial conditions and thus support businesses and vulnerable groups, especially SMEs.

ASIA EQUITY FLOWS 

• Taiwan inflow momentum slowed after a strong run in recent weeks. Indonesia flows have risen as the local benchmark rallied to fresh record highs.