MNI Asia Pac Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• Japan Labor earnings were strong in terms of the headline result, but sample changes likely distorted the outcome. The August PPI remained above 7%y/y for the third straight month, pointing to on-going firmer CPI y/y headline momentum.
• BoJ-dated OIS pricing has moved firmer over the past month and is now 9-25bps higher than pre-July MPM levels. Markets currently assign a 90% probability to a 25bp hike to 1.25% at the September MPM, with the move more than fully priced by October.

AUSTRALIA 

• Australia consumer and business confidence weakened in prints this week. Notably the NAB business conditions measure fell to its lowest level since 2020, in a sign of weaker growth momentum. Still, RBA expectations are firm around tightening expectations for the end September meeting, which reflects global/oil price shifts, whilst RBA rhetoric remains on the hawkish side, with low tolerance for inflation surprises. 

NEW ZEALAND

• It was a light data week this week for NZ. The manufacturing PMI eased but remain comfortably in expansion territory. Next week we get Q2 GDP, where economic growth is expected to be barely positive in q/q terms.  

SHORT TERM RATES 

• Interest-rate expectations through December 2026 have repriced sharply higher across the $-bloc over the past week, led by Canada (+14bps), Australia (+12bps), the US (+10bps) and New Zealand (+9bps).

CHINA 

• This week’s China data affirmed the strong support for local growth from the export side, along with a robust trade surplus, which comes ahead of President Xi’s trip to the US later this month. Inflation metrics picked up a little and don’t point to an imminent easing need. Next week we get August activity figures. China bond resilience to global shocks/oil surges was on full display this week. 

ASIA 

• It was a generally quiet week data wise in EM Asia markets elsewhere – Malaysian industrial production slowed, while Indonesia consumer confidence ticked up.