MNI ASIA PAC Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• The BoJ left rates on hold as expected. Once again there were two dissenters, board members Takata and Tamura voted in favour of a rate hike but this viewpoint is not shared by the majority of the board, leaving the decision to hold rates steady at a 7-2 vote. Focus remains on wage outcomes, with Governor Ueda also wanting to assess more data. FX jawboning on yen weakness continued. 

AUSTRALIA 

• The Q3 trimmed mean was higher than expected rising 1.0% q/q to be up 3.0% y/y up from 0.7% q/q (revised +0.1pp) & 2.7% y/y. This looks high enough to keep the RBA on hold on 4 November and possibly also in December as it waits for more data, especially as the Q3 2q/2q annualised rate printed at 3.4%.

NEW ZEALAND

• Q3 NZ filled jobs rose 0.1% q/q signalling that employment likely stabilised in the quarter after falling 0.1% q/q in Q2. Q3 labour market data print on 5 November and will be an important input into the 26 November RBNZ decision.
• The MPC discussed policy transmission at the October meeting, implying they are concerned that the pass through of rate cuts to the economy has not been as efficient as expected. RBNZ’s Richardson said that global factors have increased NZ long-end yields, which have put upward pressure on domestic rates and thus financial conditions, and the RBNZ could “adapt” policy to ease them again.

CHINA 

• China's September Industrial Profits at 21.6% YoY surged to their highest since November 2023. The strength of the profit results comes as declines in factory gate price pressures eases following a government campaign to rein in excess capacity. Still, Official Mfg PMIs slipped further into contraction in October, with the gap widening to non-SOE PMIs (via RatingDog services). 

SOUTH KOREA 

• The momentum in the economy seems to be building as the 3Q result topped estimates. Korea's 3Q advance GDP printed at +1.7% YoY, ahead of expectations of +1.2% and significantly up from 2Q’s 0.6%.

ASIA 

• September Thai customs export growth was significantly stronger than Bloomberg consensus expected rising 19.0% y/y after 5.8%, highest since March 2022. While imports were also higher up 17.2% y/y following 15.8%, the pickup in shipments was enough to return the merchandise trade balance to surplus.

ASIA EQUITY FLOWS 

• The Indian equity inflow recovery continued, but remains patchy. Strong inflows are not evident for South Korea or Taiwan, despite firm local equities. 

GLOBAL 

• The Bloomberg container ship count from China to the US fell sharply over October as tensions intensified again but may now recover when it is confirmed that an additional 100% US tariff will be avoided from 1 November.