MNI Asia Pac Weekly Macro Wrap:

Download the Full Report here

Executive Summary:

JAPAN 

• This week’s data showed still soft export trends, but a resilient capex backdrop. July national inflation figures were close to expectations, with headline pressures moderating further but core indices remaining sticky. This suggests the BOJ is still likely to raise rates, but the data didn’t add any fresh urgency to such an outlook. 

AUSTRALIA 

• Australian data this week has largely been second tier, but outcomes were encouraging in terms of consumer confidence rising and better PMI outcomes. Inflation expectations also moderated from recent highs. 

NEW ZEALAND

• The MPC believes that spare capacity is now greater and more persistent than expected in May. As a result, the MPC decided to cut rates 25bp to 3% and to give a distinctly dovish message with two members voting for a 50bp reduction.

SHORT TERM RATES 

• Interest rate expectations across the $-bloc were mixed over the past week: New Zealand fell sharply by 19bps, the US firmed by 7bps, while Australia and Canada remained largely unchanged.

CHINA 

• Focus remains on China growth drivers, with infrastructure and fiscal policy still key. China equities continue to rally despite recent disappointing economic data. 

SOUTH KOREA 

• South Korea’s early August export data suggests external demand held up, despite tariff headwinds. Fiscal spending is expected to rise further from here to support growth and longer term key initiatives. 

ASIA 

• BI surprisingly cut rates 25bp for a second consecutive month driven by global growth worries and further rupiah appreciation since the July decision.

ASIA EQUITY FLOWS 

• Taiwan outflows were dominant this week as tech equity jitters drove fresh offshore selling. Indonesian inflow momentum remained firm.