MNI ASIA PAC Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• The BoJ held rates steady this week, as expected. Despite more board members voting for a rate increase, Governor Ueda didn’t give any fresh hints on rate hike timing. For April, the Tokyo CPI print was below forecasts, with services inflation slowing to 1%y/y. This doesn’t add any hawkishness to the June BoJ meeting. In the FX space, focus is on whether we see follow up intervention to Thursday’s episode. 

AUSTRALIA 

• The March/Q1 CPI data printed close to Bloomberg consensus but with trimmed mean picking up 0.1pp to 3.5% y/y in Q1, March holding at 3.3% for the fourth straight month and the 2q/2q annualised rate above 3%, another rate hike at the 5 May RBA meeting remains a clear possibility.

NEW ZEALAND

• While ANZ business confidence fell in April to its lowest since July 2023, it had improved in April from the late March responses at -10.6 compared with -22.5. The RBNZ will likely be pleased to see pricing intentions fairly stable and a moderation in wage expectations, thus signalling limited second-round effects currently, but the inflation trend still appears upwards.
• Still, the ANZ consumer sentiment survey showed plunging sentiment, while inflation expectations rose to 6.6%. 

SHORT TERM RATES 

• Amidst ongoing uncertainty around the Middle East conflict and its implications for oil prices, interest-rate expectations across the $-bloc through December 2026 were little changed over the past week, except for Canada's 12bp firming.

CHINA 

• China’s RatingDog PMI rose to multi year highs in April, while the official PMIs were more mixed. Overall, the growth backdrop looks resilient to start the year. Market expectations for fresh monetary policy easing in the near term remain fairly low.  

SOUTH KOREA 

• Strength in South Korea’s export sector suggests the economy can withstand a rate hike. Next week’s CPI update, due Wednesday for April, will help inform the near term BoK outlook. 

ASIA 

• BoT held rates as expected this week and is now monitoring for upside inflation risks. Philippines trade figures were close to expectations, with the trade deficit around $4.5bn. USD/PHP and USD/IDR have risen to fresh record highs this week. 

ASIA EQUITY FLOWS 

• The past week has mostly seen net equity outflow pressure return. This has curbed inflows into tech sensitive plays like Taiwan, after strong gains in April. Oil sensitive markets like India, Indonesia and the Philippines, are seeing on-going outflow pressures.