MNI EUROPEAN MARKETS ANALYSIS: US NFP In Focus Later

• The US Administration announced reciprocal tariff rates. Switzerland's 39% rate was a surprise, which modestly weighed on CHF. Other rates were predominantly in the 10-40% range.
• Equity sentiment looks less firm (the Kospi in South Korea slumped today), while the USD is higher against most Asian currencies. G10 FX trends are mixed, with Japan rhetoric on FX weakness picking up.
• US Tsy yields are mixed in a quiet Asia Pac session.
• The main upcoming focus will be the US non-farm payrolls report, while the US ISM also prints. 

MARKETS

US TSYS: Asia Wrap - Yields End Mixed In A Quiet Session

The TYU5 range has been 110-29 to 111-00+ during the Asia-Pacific session. It last changed hands at 110-30+, down 0-03 from the previous close. 

• The US 2-year yield has shifted lower trading around 3.947%, down 0.01 from its close.
• The US 10-year yield has edged higher trading around 4.376%.
• The 10-year yield has again held the support around its pivot within the wider range 4.10% - 4.65%, decent supply was seen around the 4.30/35% area once more. This would need to clear above the 4.45% area to potentially regain upward momentum now.
• Bob Elliott on X: ”The combination of higher inflation and slowing wage growth is set to put even more of a squeeze on household consumption ahead and with it a weakening broader economy.”
• Nick Timiraos on X: “Core goods inflation is adding around 0.34 pp to core PCE inflation above the average contribution from the decade before the pandemic. Shelter is adding around 0.23 pp above the pre-pandemic trend. Remember, the pre-pandemic trend was below 2%, so not everything needs to go back to the pre-pandemic trend to hit 2%, but the disinflation in services is now being offset by the inflation in goods.”
• Robin Brooks on X: “The tariff inflation impulse to CPI and PCE is clear to see for stuff we import from China: furnishings and recreational goods. Monthly inflation is 100 - 120 bps above where it normally would be around this time of year. That's a massive inflation shock…”
• Data/Events: NFP, S&P Global Man PMI, ISM Manufacturing, Construction Spending, U. of Mich. Sentiment

Fig 1: 10-Year US Yield 120min Chart

Source: MNI - Market News/Bloomberg Finance L.P

STIR: $-Bloc Markets Little Changed over Past Week Apart From US Firming

Interest rate expectations across the$-bloc economies were broadly stable over the past week, except for the U.S., where rates firmed by 11bps. 

•  The July FOMC decision included a subtle shift, hinting that the Committee may be laying the groundwork for a potential rate cut in September. However, Chair Powell used much of the post-meeting press conference to downplay that possibility. As a result, markets scaled back expectations for near-term easing, with the probability of a September cut falling to around 50% by the end of the session, down from roughly 60% beforehand.
• In Canada, the Bank of Canada (BoC) held its overnight rate steady at 2.75% in July, as expected. Markets interpreted the decision as mildly dovish, with a modest increase in the likelihood of a rate cut by year-end. Although Governor Macklem stated that little had changed since the June meeting, the accompanying statement struck a more dovish tone when reviewing developments since the start of the year.
• Looking ahead, the next key regional event is the RBA decision on August 8. After this week’s Q2 underlying CPI undershoot, the market is assigning a 97% probability to a 25bp rate cut at the upcoming meeting.  
• Looking ahead to December 2025, current market-implied policy rates and cumulative expected easing are as follows: US (FOMC): 4.00%, -33bps; Canada (BOC): 2.60%, -16bps; Australia (RBA): 3.26%, -59bps; and New Zealand (RBNZ): 2.90%, -35bps.

 Figure 1: $-Bloc STIR (%)

 Source: Bloomberg Finance LP / MNI 

JGBS: Subdued Session Ahead Of Payrolls, Tariff Uncertainty Remains

JGB futures are stronger but well off Tokyo session bests, +5 compared to the settlement levels.

• Yesterday, Governor Ueda stressed that underlying inflation remains below target and emphasised the need for more data to assess the full impact of 15% U.S. tariffs on Japan’s economy.
• The BoJ revised up its FY2025 growth and inflation forecasts modestly, expecting improvements in wage growth and activity later in the fiscal year, while warning of near-term headwinds from global demand and trade frictions.
• Although some speculate an October hike is possible post-political uncertainty, the BoJ is likely to wait until early 2026, seeking clearer evidence of wage-driven inflation and minimal tariff disruption. See full MNI BoJ Review here
• Cash US tsys are slightly mixed, with a steepening bias, in today’s Asia-Pac session. Today’s US calendar will see: NFP, S&P Global Man PMI, ISM Manufacturing, Construction Spending, U. of Mich. Sentiment.
• Cash JGBs are slightly richer out to the 20-year, but 1-2bps cheaper beyond. The benchmark 10-year yield is 0.6bp lower at 1.551% versus the cycle high of 1.616%.
• The swaps curve has twist-steepened, with rates 1bp lower to 2bps higher, pivoting at the 20-year.
• On Monday, the local calendar will see Monetary Base data.

JAPAN DATA: Jobless Rate Steady, But Job-To-Applicant Ratio Falls To Fresh Lows

Earlier data showed mixed June labor market conditions. The unemployment rate was steady at 2.5%. This was in line with market forecasts. The unemployment rate has been steady at 2.5% since March of this year. This is just up from cycle lows of 2.4%. However, the job to applicant ratio rose fell to 1.22 from 1.24 prior, which was also below the 1.25 consensus expectation. This is the lowest job-to-applicant ratio since 2022. The chart below plots this ratio (it is inverted on the chart) against Japan's unemployment rate (the orange line on the chart). Job offers fell by -1.2%m/m, to be down 1.9%y/y, which is around the recent pace. 

• The number of people employed fell by 50k after a surge of +330k in May. This metric has fallen in 4 out of the last 5 months. The number of people not in the labor force fell by 50k as well, helping keep the unemployment rate steady.
• The still tight labor market is a positive for the wages outlook, all else equal but the weakness in the job-to-applicant ratio is implying some upside risks. 

Fig 1: Japan Unemployment Rate & Job To Applicant Ratio (Inverted)

Source: Bloomberg Finance L.P./MNI 

AUSSIE BONDS: Cheaper Ahead Of US Payrolls

ACGBs (YM -5.0 & XM -5.0) are weaker after today’s domestic data drop and ahead of tonight’s US Payrolls release. Cash US tsys are slightly mixed, with a steepening bias, in today’s Asia-Pac session

• (DJ via BBG) "Australian house prices posted a sixth consecutive monthly rise in July, supported by ongoing speculation that the Reserve Bank of Australia will deliver further interest-rate cuts through the second half of the year. The home value index rose 0.6% in July from June, according to property research group Cotality, with the strongest growth reported in Brisbane, Perth and Adelaide."
• Cash ACGBs are 5bps cheaper with the AU-US 10-year yield differential at -7bps.
• The bills strip has bear-steepened, with pricing -2 to-6.
• RBA-dated OIS pricing is firmer across meetings today. A 25bp rate cut in August is given a 97% probability, with a cumulative 57bps of easing priced by year-end (based on an effective cash rate of 3.84%).
• On Monday, the local calendar will see Melbourne Institute Inflation.
• Next week, the AOFM plans to sell A$300mn of the 4.25% 21 June 2034 bond on Tuesday, A$900mn of the  4.25% 21 March 2036 bond on Wednesday and A$1000mn of the 3.00% 21 November 2033 bond on Friday.

BONDS: NZGBS: Typical Subdued Pre-US Payrolls Friday Session

NZGBs closed little changed, with benchmark yields flat to 1bp higher, after a subdued pre-US payrolls Friday session.

• (Bloomberg) -- Smaller economies including New Zealand, Costa Rica and Bolivia saw US import tariffs rise to 15% — up from the 10% baseline released on April 2 — as part of a sweeping effort to penalize countries running trade surpluses with the US.
• Cash US tsys are slightly mixed, with a steepening bias, in today’s Asia-Pac session.
• Today’s US calendar will see: NFP, S&P Global Man PMI, ISM Manufacturing, Construction Spending, U. of Mich. Sentiment.
• Swap rates closed 1bp lower to 1bp higher, with a steeper 2s10s curve.
• RBNZ dated OIS pricing closed little changed across meetings. 21bps of easing is priced for August, with a cumulative 34bps by November 2025.
• On Monday, the local calendar will be empty, ahead of Commodity Prices on Tuesday, and the Q2 Employment Report and House Prices on Wednesday.

NEW ZEALAND: ANZ Consumer Confidence Down In July, Inflation Expectations Up

The New Zealand ANZ consumer confidence index fell by 4.1% in July, putting the index back at 94.7 (prior was 98.8).  The trend in consumer sentiment since the start of the year has largely been sideways. The index peaked around 100.0 at the end of last year, after trending up from lows of 82 from earlier in the year. Since late 2021, the index has spent no time above the 100.0 level. See the chart below, the white line on the chart is NZ private consumption growth in q/q terms. 

• Most of the sub indices ticked lower, with the economy 1yr ahead at -16, versus -13 prior (although we are still above recent lows). Family finances for the year ahead fell to 11 from 20 in June. Time to buy a major household item eased to -8 from -7 (also above recent lows). Inflation expectations also rose to 5.1% from 4.9% prior. This was the highest read since 2023.
• ANZ noted: "“Soft consumer confidence is both a reflection of and a contributor to the sluggish economy”: ANZ, “The economy is making hard work of recovering from last year’s recession. Activity indicators have slipped in recent times and it’s entirely possible that both GDP and employment went backwards in the June quarter” (via BBG). 

Fig 1: ANZ NZ Consumer Confidence & Household Consumption Growth 

 Source: Bloomberg Finance L.P./ANZ/MNI 

FOREX: Asia FX Wrap - The USD Probing Pivotal Resistance Going Into NFP

The BBDXY has had a range of 1220.89 - 1223.02 in the Asia-Pac session, it is currently trading around 1222, +0.02%. The USD’s slide lower finally stalled at the back end of last week and some profit-taking was seen. Monday’s US-EU trade deal was seen as a big loss for the European Union and this provided the USD bounce with further tailwinds. A higher than expected PCE print overnight reinforced the hawkish tone from Powell and added to the USD’s tailwinds and to the shorts woes. The market is testing the pivotal 1220/30 area this morning, a sustained break of which could signal a deeper correction potentially back to the 1250 area. The market will now be gearing up for the NFP print tonight which could add further momentum to the move or help put a top in.

• EUR/USD -  Asian range 1.1405 - 1.1429, Asia is currently trading 1.1420. The pair has found some demand around its first support for now. The pair is very quickly testing the important 1.1300/1.1400 area, where I would expect demand first up. When a market that is this long sees a move that quick it cannot reduce so initially bounces should now find sellers. The Long-term support looks to be towards the 1.1100 area where I would expect to find fresh buyers.
• GBP/USD - Asian range 1.3190 - 1.3216, Asia is currently dealing around 1.3195. This pair looks like it is now breaking lower indicating a deeper correction. Price has moved very quickly back towards the 1.3100/1.3200 support where I would expect demand first up, look for supply now on bounces back towards 1.3400.
• USD/CNH - Asian range 7.2058 - 7.2218, the USD/CNY fix printed 7.1496, Asia is currently dealing around 7.2150. Sellers should be around on bounces while price holds below the 7.2200/2500 area and the PBOC manages the fix lower. Above 7.2500 and we could see a test of the USD Shorts.
• Cross asset : SPX -0.20%, Gold $3290, US 10-Year 4.378%, BBDXY 1221, Crude Oil $69.47
• Data/Events : Spain Man PMI, Italy Man PMI/ Retail Sales, France Man PMI, Germany Man PMI, EZ Man PMI/CPI

Fig 1: BBDXY Spot Weekly Chart

Source: MNI - Market News/Bloomberg Finance L.P

JPY: Asia Wrap - USD/JPY Pauses Towards 151.00, Officials Begin Jawboning

The Asia-Pac USD/JPY range has been 150.55 - 150.92, Asia is currently trading around 150.60, -0.10%. The JPY tried to rally on the inflation outlook being raised by the BOJ, but when Ueda spoke later he offered no clear idea of when the next rate hike would be. This saw the dip lower in USD/JPY be short-lived and its momentum higher resumed, the USD continued to grind higher adding to the pairs tailwinds. Price has moved quickly to now be testing its pivotal 151.00/152.00 area, I would expect some supply here first up but a sustained break above here would be a real worry for an institutional market that is still long JPY. The BOJ would also not be happy if this area does break as it would signal a potential move back to the area they have been defending 155-160.

• "JAPAN LABOUR MINISTRY COUNCIL EYES ABOUT 6% HIKE NATIONWIDE IN FY2025 AVERAGE MINIMUM WAGES, BIGGEST RISE EVER, KYODO SAYS - [RTRS]"
• (Bloomberg) - “Japan’s Finance Minister said he’s worried by movements in the yen, which weakened to levels last seen in March following dovish messaging on interest rates from the Bank Of Japan. “The government is deeply concerned about trends in the currency market, including speculative movements” Kato told reporters.”
• Earlier data showed mixed June labor market conditions. The unemployment rate was steady at 2.5%. This was in line with market forecasts. The unemployment rate has been steady at 2.5% since March of this year. This is just up from cycle lows of 2.4%. However, the job to applicant ratio rose fell to 1.22 from 1.24 prior, which was also below the 1.25 consensus expectation. This is the lowest job-to-applicant ratio since 2022.
• Options : Close significant option expiries for NY cut, based on DTCC data: 150.00($1.16b), 147.00($1.62b).Upcoming Close Strikes : 150.00($1.04b Aug 4) - BBG.
• CFTC data shows last week Asset managers surprisingly added slightly to their JPY longs +72326( Last +71610), while leveraged funds have slightly reduced their newly built short JPY position -11571(Last -12606).

Fig 1 : USD/JPY Spot Weekly Chart

Source: MNI - Market News/Bloomberg Finance L.P

AUD: Asia Wrap - AUD/USD Retraces A Little Going Into NFP

The AUD/USD has had a range of 0.6422 - 0.6440 in the Asia- Pac session, it is currently trading around 0.6435, +0.17%. The momentum higher in risk could not be maintained overnight and a higher than expected PCE print overnight brought the hawkish tone of the Fed back into view. This saw the early AUD/USD rally stall and quickly move lower again. That looks like a very poor Daily close for US Stocks and could signal its time for risk to take a breather which opens the possibility of some reversion back to the mean. Should this unfold it will add to the AUD/USD headwinds being faced by a resurgent USD. The 0.6350 area is very important and a sustained move below that level should get the bears excited again as momentum would turn lower. The market will now be gearing up for the NFP print tonight which could add further momentum to the move or help put a base in.

• "AUSTRALIA 2Q PRODUCER PRICES RISE 0.7% Q/Q (prior 0.9%), AUSTRALIA 2Q PRODUCER PRICES RISE 3.4% Y/Y(prior 3.7%) " - BBG
• (Bloomberg) -- Australian home prices climbed for a sixth straight month with every major city reporting gains, while signs of resurgent rents are set to stretch the budgets of households in this segment.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6650(AUD374m). Upcoming Close Strikes : 0.6000(AUD1.31b Aug 5), 0.6600(AUD847m Aug 5) - BBG
• AUD/JPY - Asia-Pac range 96.79 - 97.06, Asia is trading around 96.95. The pair has bounced nicely off its support around 96.00 and is again testing the recent tops above 97.00 this morning. The support between 95.00 - 96.00 held very well last week and the pair is looking to regain its momentum for a move higher. With risk having a huge reversal lower overnight and opening soft this morning you would be forgiven for thinking this pair should be finding some headwinds and potentially drift lower. JPY longs are being squeezed and this is overriding everything.

Fig 1: AUD/USD spot Weekly Chart

Source: MNI - Market News/Bloomberg Finance L.P

NZD: Asia Wrap - NZD/USD Remains Heavy Going Into NFP

The NZD/USD had a range of 0.5874 - 0.5901 in the Asia-Pac session, going into the London open trading around 0.5885, -0.10%. The momentum higher in risk could not be maintained and a higher than expected PCE print overnight brought the hawkish tone of the Fed back into view. This saw the early NZD/USD rally stall and quickly move lower again. That looks like a very poor Daily close for US Stocks and could signal its time for risk to take a breather which opens the possibility of some reversion back to the mean. Should this unfold it will add to the NZD/USD headwinds being faced by a resurgent USD. The 0.5800/50 area looks to be pivotal and a sustained break below could signal momentum is set to turn lower. The market will now be gearing up for the NFP print tonight which could add further momentum to the move or help put a base in.

• "NZ JUNE HOME-BUILDING APPROVALS FALL 6.4% M/M (prior +10.4%m/m) - BBG
• NEW ZEALAND ANZ Consumer Confidence Down In July, Inflation Expectations Up : The New Zealand ANZ consumer confidence index fell by 4.1% in July, putting the index back at 94.7 (prior was 98.8). The trend in consumer sentiment since the start of the year has largely been sideways. The index peaked around 100.0 at the end of last year, after trending up from lows of 82 from earlier in the year. Since late 2021, the index has spent no time above the 100.0 level.
• Kelly Eckhold(Westpac NZ) on LinkedIn: “The reciprocal tariff list is out and New Zealand got lifted to 15%. Australia was left at 10% so we lose some ground compared to them there. Not great news. Although interesting to note that generally our Asian trading partners rates got revised down from the 20s to 19%. Hence the direct impact on NZ is greater but the indirect impacts smaller. The indirect impacts are the main game here.”
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5375(NZD330m Aug 6). - BBG
• AUD/NZD range for the session has been 1.0905 - 1.0944, currently trading 1.0940. The Cross continues to consolidate on a 1.09 handle as the pair tries to build some momentum to move higher.

Fig 1: NZD/USD Spot Weekly Chart

Source: MNI - Market News/Bloomberg Finance L.P

ASIA STOCKS: Kospi Slumps Over 3%, China Vows To Curb Disorderly Competition

Most major Asia Pac indices are lower, although there are pockets of strength in parts of South East Asia. US equity futures are down modestly after mixed late earnings on Thursday US time (better for Apple, while Amazon disappointed). Broader US equity sentiment looks a little shakier, after what looked like a key day reversal on Thursday. Markets are also digesting the reciprocal tariff announcements from the US. South Korean markets are the weakest performers, down over 3%. 

• China and Hong Kong markets are down modestly at this stage, the CSI 300 off 0.25% to 4065, following a sharp fall yesterday. The SHI was last near 24728, off 0.20%. Headlines have crossed from China's NDRC, which has vowed to regulate disorderly competition in the economy. This has become a key focus point for policy makers. The NDRC also stated that the fourth tranche of support for consumers (via the trade in program), will be allocated in Oct. NDRC also stated it will provide support for jobs and domestic when needed (per BBG). Earlier, the S&P Mfg PMI fell more than expected and is now back in contraction territory.
• The Kospi has fallen over 3%, putting the index back near3135, with sentiment weighed by tax changes. BBG notes :"The threshold for capital gains tax on stock holdings would drop to 1 billion won ($714,250) from 5 billion won and the transaction tax would increase, according to proposals released by the finance ministry in Seoul on Thursday. Meanwhile, the top corporate tax rate would rise to 25% from 24%, reversing a cut by the previous administration." Offshore investors have sold over $500mn of local stocks today. Note from late May the Kospi was up over 25%, driving significant outperformance.
• The Taiex is down around 0.70% at this stage. Taiwan's reciprocal tariff rate of 20% is higher than Japan and South Korea's but the authorities have vowed to negotiate further.
• In South East Asia, Malaysia and Indonesia indices are up over 1%. For Indonesia we are still sub late July highs, while offshore investors have remained net sellers. Elsewhere, the tone is mostly softer, although losses are modest at this stage.  

ASIA STOCKS: Can Positive Flow Momentum For South Korea/Taiwan Be Sustained?

At the end of July, offshore inflow momentum remained positive for South Korea and Taiwan. Taiwan's net inflows for July were close to $8.3bn, while South Korea's were around $4.5bn. As we enter a new month focus will be on if we can sustain these trends. US equity market sentiment looks a little less firm, after a strong rebound. South Korea's Kospi has fallen by over 3% today. with investors spooked by shifts in tax policies that have been announced recently. Already today offshore investors have sold $363mn of local stocks. 

• In Taiwan, the reciprocal tariff rate of 20% is higher compared to South Korea and Japan, with the authorities aiming to bring this down. Growth momentum will also be in focus after a surge in H1. PMI trends remain soft for Taiwan.
• For India, outflow momentum persists, albeit at a more moderate pace.
• Thailand remained a bright spot for South East Asia into end July. Indonesian markets saw consistent outflows (-$511.3mn for July as a whole). 

Table 1: Asian Markets Net Equity Flows 

Source: Bloomberg Finance L.P./MNI  

Oil Set For Large Weekly Gain

• Oil has had a strong week and is up in the Asia trading day today.  
• WTI is up +0.30% today in Asia and over 6% for the week taking it back above all major moving averages.  

• Brent is lower today by -0.85% but remains up over 5% for the week.  
• Oil's attention is clearly on President Trump's threats against Moscow and an upcoming deadline for a truce in Ukraine.  
• Trump has singled out India for buying Russian oil, a move that prompted the government to tell state owned refiners to search for new sources.  
• With the tariff deadline here, Trump’s tariffs and any retaliatory measures from targeted countries will be the focus for oil markets in the coming days. The president signed an executive order that increases the rate on Canada to 35% from 25%, but kept in place an exemption for goods under the US-Mexico-Canada trade pact that includes oil.
• US gasoline, diesel and jet fuel demand in May were all markedly higher in the Energy Information Administration's monthly report compared to estimates published in the agency's Weekly Petroleum Status Report.  Diesel demand climbed to 3.8 million barrels a day in May, about 6.5% higher than the weekly averages previously published by the agency, while demand for jet fuel was 5% higher and gasoline was 3% higher. (source BBG)

Gold Set for Weekly Decline

• Despite being up on four out of the five trading days this week, gold is set for a weekly decline.  
• With the European and US trading sessions ahead, gold sits week to date down over 1 percent.   It is up by a modest +0.10% in the Asia trading day at US$3,293.15.
• Tuesday saw the large down day which took gold below the 50-day EMA of $3,318.88, with the 100-day EMA of $3,234.82 below.  

• Gold's modest gains have been supported by the unveiling of tariff rates from the US President which has announced a minimum global tariff of 10% while imports of countries with surpluses will be 15% or more.  
• Gold finished it's best month of 2025 in July and could be set to trade within tight ranges in early August as the impact of the tariff announcements are assessed.  

CHINA: S&P Global China PMI Manufacturing Suddenly Contracts

• The July PMI for private companies and exporters was expected to moderate, but remain in expansion.  
• The result of +49.5 was below estimates of +50.2 and down from June's result of +50.4.  
• Output fell dramatically to +48.5 from +52.1 and appears to be an adjustment to the increase in output by firms to get exports out ahead of tariffs.  
• New orders are down month on month also.  

INDONESIA: Exports Up Strongly in June

• Indonesia's June export result of a YoY increase of +11.29% comes prior to the agreement with the US on a tariff proposal, beating estimates of +10.21%.  
• Exports to US +25.13% YoY to $2.7b; trade surplus $1.9b,  Exports to China +13.72% YoY to $5.4b; trade deficit $2b.
• Imports in June were substantially lower than forecasts at +4.28% (est. 6.33%) against the prior month's revised +4.71%.
• The result being a trade surplus of $4.11bn down from the prior month of $4.3bn.  

• In July, Indonesia had become the second Asian nation to reach an agreement with the US, following President Donald Trump's launch of his tariff war on the world in April.  The US would pay no tariffs to Indonesia under the deal, while goods from the South-east Asian nation would face a 19 % tariff.  President Trump had threatened Jakarta with a 32 per cent tariff rate, effective August 1 before reaching the negotiated result.    

  

SOUTH KOREA: Trade Data Strong in Face Tariffs

• July exports for South Korea beat expectations despite the ongoing threat of tariffs from the US.  
• Exports rose +5.9% in July beating expectations of +5.1% and an increase in +4.3% in June.  
• The July result are likely reflective of ongoing impacts of exporters looking to ship goods prior to the imposition of US tariffs, now set at 15%.  
• Imports rose a mere 0.7%, below expectations of 2.0% and down from June 3.3%.  
• The resulting trade balance was below expectations at US$6.6bn and down from the June revised amount of $9.08bn.   

ASIA: South Korea & Taiwan PMIs Decline Further

South Korea's July PMI fell to 48.0 from 48.7 in June. This is above recent lows at 47.5, but keeps us in contraction territory for the 6th straight month. The index started the year at 50.3. 

• In terms of the detail, output fell to 47.4 form 49.2, while new orders were also down versus the prior month. 

Taiwan's PMI fell to 46.2 from 47.2 prior. This is the lowest reading reading since late 2023. The index was at 52.7 at the end of 2024. Output fell to 42.8 from 45.4 in June. Like South Korea, new orders were also down versus the prior month. 

CHINA: Country Wrap: Home Sales Slump Further

• China’s home sales extended their slump in July as declining prices failed to attract buyers, buttressing speculation about fresh measures to support the market.   The value of new-home sales by the 100 largest property companies dropped 24% from a year earlier to 211.2 billion yuan ($29.3 billion), according to preliminary data from China Real Estate Information Corp. Sales plunged 38% from 339 billion yuan in June (source BBG).
• The US government sent mixed messages on Thursday on where the latest trade agreement with China, including a possible extension of the pause on tariff hikes, is headed.  Asked by a reporter at the regular press briefing whether an extension of the current pause on import tariffs aimed at each others’ products “was on the table”, White House press secretary Karoline Leavitt said, “I don’t think so, but I’ll let [Treasury Secretary Scott Bessent] speak on that, because he’s leading these negotiations.”  (source SCMP)
• China and Hong Kong markets are down modestly at this stage, the CSI 300 off 0.25% to 4065, following a sharp fall yesterday. The SHI was last near 24728, off 0.20%. Headlines have crossed from China's NDRC, which has vowed to regulate disorderly competition in the economy. This has become a key focus point for policy makers. The NDRC also stated that the fourth tranche of support for consumers (via the trade in program), will be allocated in Oct. NDRC also stated it will provide support for jobs and domestic when needed (per BBG). Earlier, the S&P Mfg PMI fell more than expected and is now back in contraction territory.
• Yuan Reference Rate at 7.1496 Per USD; Estimate 7.2054
• Bonds have fought back with the 10YR CGB closing at 1.74% earlier in the week, only to rally back to 1.70% today.

INDIA: Country Wrap: Refiners Told Find New Oil Sources

• Indian state refiners have stopped buying Russian crude in the last week as discounts narrowed and US President Donald Trump warned countries against buying oil from Moscow, sources told Reuters.  (source Fin Express)
• India’s Tata Steel Ltd. is planning to explore new markets in regions such as the Middle East and Latin America, as President Donald Trump’s tariffs impact shipments to the US.  “We are looking at other markets where there is a requirement for high-end steel and where we are not impacted by these kinds of tariffs,” Chief Executive Officer T.V. Narendran told Bloomberg Television in an interview without elaborating on fallout from US levies.   (source BBG)
• India's July final manufacturing purchasing managers' index rose to +59.1 from +58.4 in June; moderately lower from the Preliminary numbers earlier.  This was the highest reading in more than a year as output rose to +62.5 vs +62.1 in June (the highest reading since April 2024) and new orders were up vs prior month.  This comes ahead of next week's RBI decision on Wednesday where at this stage, there is limited expectation for a rate cut.  (source MNI)
• The NIFTY 50 is down by -0.29% today and -0.56% for the week as global sentiment turns on tariff announcements.
• The Rupee is up today by +0.35%, bucking regional weak trends yet remains weaker by -0.90% for the trading week.
• India' s  10yr bond is +2bp higher for the week at 6.37%

UP TODAY (TIMES GMT/LOCAL) 

Date	GMT/Local	Impact	Country	Event
01/08/2025	0715/0915	**	ES	S&P Global Manufacturing PMI (f)
01/08/2025	0745/0945	**	IT	S&P Global Manufacturing PMI (f)
01/08/2025	0750/0950	**	FR	S&P Global Manufacturing PMI (f)
01/08/2025	0755/0955	**	DE	S&P Global Manufacturing PMI (f)
01/08/2025	0800/1000	*	IT	Retail Sales
01/08/2025	0800/1000	**	EU	S&P Global Manufacturing PMI (f)
01/08/2025	0830/0930	**	GB	S&P Global Manufacturing PMI (Final)
01/08/2025	0900/1100	***	EU	HICP (p)
01/08/2025	-	***	US	Domestic-Made Vehicle Sales
01/08/2025	1230/0830	***	US	Employment Report
01/08/2025	1345/0945	***	US	S&P Global Manufacturing Index (final)
01/08/2025	1400/1000	***	US	ISM Manufacturing Index
01/08/2025	1400/1000	*	US	Construction Spending
01/08/2025	1400/1000	***	US	U. Mich. Survey of Consumers
01/08/2025	1400/1000	**	US	University of Michigan Surveys of Consumers Inflation Expectation
01/08/2025	1400/1000	*	US	Construction Spending
01/08/2025	1700/1300	**	US	Baker Hughes Rig Count Overview - Weekly
01/08/2025	1700/1300	**	US	Baker Hughes Rig Count Overview - Weekly