HKD: USD/HKD Spot Lower Following Further HKMA Intervention

Overnight, the fortnightly whole milk powder auction saw prices fall a further 3.7% versus the prior result. From $4332, we are now back at $4173. This is the second consecutive decline for the auction result, but by recent standards we are still elevated from an historical standpoint. The chart blow plots the auction whole milk price against the Citi terms of trade index for NZD. 

• BBG noted: "The GDT price index change, which is a weighted average of the percentage changes in individual milk products between trading events, was a decrease of 1.6%"
• Yesterday we had the Q1 terms of trade print, which were positive in q/q terms but sub market expectations. Higher dairy prices aided the goods terms of trade backdrop. 

Fig 1: Whole Milk Auction Price & Citi Terms Of Trade For NZD 

US light vehicle sales (cars and light trucks) fell more sharply than expected in May, to 15.65M (16.00M expected, 17.27M prior), per Wards Automotive Group data.

• This follows a 4-year-high 17.77M in March, with April's representing the 2nd-highest monthly sales since 2021.
• Both prior months - and the dropoff - are very likely related to tariff front-running and the subsequent reversal of that effect.
• Note that autos are the single largest category of Census Bureau retail sales, and this report suggests that a significant pullback in the latter is likely in the May report (out Jun 17), after two record nominal highs in March and April in the category.
• Note that vehicles are not part of the Census Bureau's Control Group measure.