BOBL TECHS: (U5) Trades Through The 50-Day EMA

• China's manufacturing hub enhances economic and trade exchanges with Europe as the growing popularity of products from Guangdong in Europe is underpinned by strengthening China-Europe ties, a well-developed international logistics network, and increasingly diversified economic and trade cooperation.  (source XINHUA)
• China has recently accelerated the integration of sci-tech innovation with industrial innovation, demonstrating remarkable achievements in pursuing high-quality development.  * The secret behind the innovation boom lies in China's robust industrial ecosystem, which is built on a policy framework to improve relevant services and help translate patents into products.  * Going forward, China will strengthen the principal position of enterprises in sci-tech innovation, thereby creating a stronger synergy between scientific and industrial innovation.  (source XINHUA)
• The China CSI 300 is off a touch, but still close to recent highs. The HSI is down around 1%, but still above the 25300 level. Japan markets are also weaker, the Topix off close to 0.85%. Proximity to earnings outcomes and the Fed decision/data is being cited as a headwind for these markets.
• Yuan Reference Rate at 7.1511 Per USD; Estimate 7.1909
• The yield on the CGB 10yr has inched up to 1.73% with bond futures lower for the seventh day out of eight.  

Westpac’s Q2 trimmed mean inflation forecast of 0.7% q/q & 2.7% y/y is in line with Bloomberg consensus but it sees risks to the downside. “At two decimal places, our Trimmed Mean estimate is 0.66% which suggests there is greater risk of a 0.6% print than a 0.8% print.” Its headline projection though for Q2 and June are higher than consensus.

• Westpac doesn’t believe a trimmed mean print above its 2.6% y/y May forecast would be “enough to prevent the RBA from cutting rates at its August meeting”, especially as its projection suggests a 0.55% q/q Q2 rise.
• “Remembering that the data for the Trimmed Mean is seasonally adjusted, the range of trimming in the June quarter starts from a lower bound of –0.34% to an upper bound of 2.16%. Of the most significant items trimmed off the bottom are: auto fuel, furniture, insurance and international holidays. The most significant items trimmed off the top are medical & hospital services, tobacco, domestic holidays and electricity.”
• “Outside of electricity, housing costs remain in this measure of core inflation and as such represent a potential small upside risk for our nearcast of Trimmed Mean.”
• Westpac expects a 0.9% q/q & 2.3% y/y rise in Q2 headline with June rising to 2.3% y/y from 2.1% in May due to “solid gains” in rents, electricity (+9.3% q/q), garments, fruit & veg and travel. Housing should account for 0.3pp of the 0.9% q/q rise.
• In terms of housing, “The unwinding of the cost of living electricity rebates is expected to drive the lion’s share of the increase with utilities gaining 4.8%qtr contributing 0.2ppt. Meanwhile, rents are anticipated to still make a solid 1.0%qtr/0.07ppt contribution and dwellings are set to rise 0.4%qtr/0.03ppt after falling –0.4%qtr in the March quarter.”