AUSTRALIA: VIEW: Westpac Sees Upside Risks To Its Q3 Inflation Forecasts
Aug-27 05:18
July CPI printed higher than expected impacted by the timing of Commonwealth government electricity rebates. However, both the trimmed mean and CPI ex volatile items & holiday travel saw a sizeable pickup. While this is only the first month in Q3, Westpac says it is suggesting upside risks to its quarterly forecast of 0.8% q/q & 2.7% y/y for headline and 0.6% q/q & 2.4% y/y for trimmed mean. It notes that the 0.9% m/m rise in headline showed a “potentially important shift in inflation dynamics”.
- Westpac states that the material increase in underlying inflation measures in July “should not be ignored” and that the RBA is likely to be on hold in September to wait for Q3 CPI on October 29.
- “Excluding volatile items and holiday travel, the Monthly CPI rose 3.2%yr in July, up from 2.5%yr in June and marking the fastest pace in over a year (since June 2024). This measure excludes automotive fuel, fruit and vegetables, and holiday travel and accommodation.”
- “July is the first month of the quarter, so we also received updates on quarterly price surveys, primarily for durable goods.”
- “New dwelling prices rose 0.4% in July, stronger than our 0.2% estimate. The ABS attributed this to project home builders increasing prices and reducing discounts. This presents upside risk to our September quarter dwelling price forecast, particularly if this momentum continues into August and September.”
- “The quarterly CPI is not a simple average of the Monthly CPI Indicator. History shows that taking the monthly data at face value can be misleading. Several volatile components—such as food, automotive fuel, and household durables—can reverse more quickly than reflected in our current monthly profile.”
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LOOK AHEAD: Eurozone Timeline of Key Events (Times BST)
Jul-28 05:18
| Date | Time | Country | Event |
| 29-Jul | 0800 | ES | GDP (p) |
| 29-Jul | 0900 | EU | ECB Consumer Expectations Survey |
| 30-Jul | 0630 | FR | GDP (p) / Consumer spending |
| 30-Jul | 0700 | DE | Retail Sales |
| 30-Jul | 0800 | ES | HICP (p) |
| 30-Jul | 0900 | DE | GDP (p) |
| 30-Jul | 0900 | IT | GDP (p) |
| 30-Jul | 0900 | EU | ECB Wage Tracker |
| 30-Jul | 1000 | EU | Consumer Confidence, Industrial Sentiment |
| 31-Jul | 0700 | DE | Import/Export Prices |
| 31-Jul | 0745 | FR | HICP (p) / PPI |
| 31-Jul | 0855 | DE | Unemployment |
| 31-Jul | 0900 | DE | State-level Inflation Data |
| 31-Jul | 1000 | EU | Unemployment |
| 31-Jul | 1000 | IT | HICP (p) |
| 31-Jul | 1100 | IT | PPI |
| 31-Jul | 1300 | DE | HICP (p) |
CHINA: Country Wrap: China Industrial Profits Decline in June (amended)
Jul-28 05:17
- US and Chinese officials are meeting Monday to extend their tariff detente beyond a mid-August deadline, and haggle over other ways to further defuse trade tensions. Chinese Vice Premier He Lifeng and US Treasury Secretary Scott Bessent will lead the delegations through Tuesday in Stockholm — their third meeting in less than three months. The agenda includes discussions about how long the current tariff truce can be extended, as well as US levies tied to fentanyl trafficking and Chinese purchases of sanctioned Russian and Iranian oil. (source BBG)
- Over the weekend, the release of China's Industrial Profits for the year provided limited positive news for the current state for China's corporates.
- Industrial profits year-on-year declined -4.3% in June, following the decline of -9.1% in May. The year-to-date number declined further to -1.8% YoY from -1.1% in May. Intensive competition between companies has exacerbated deflationary pressures at a time when exports to the US remain pressurized. The auto sector particularly is seeing increased competition as EV manufacturers vie for sales. State-owned automakers Guangzhou Automobile Group and JAC Group have posted losses driven by the intense pricing pressure in the auto sector. The data showed the gap widening between state owned enterprises and private companies. State-owned firms recorded a 7.6% decline in profits in the first half. Private-sector companies reported a rise of 1.7% while foreign firms logged a 2.5% increase. China's authorities have stated this month that efforts to regulate aggressive price-cutting will be forthcoming, fueling expectations that a fresh round of industrial capacity cuts might be approaching. (source MNI)
- In Hong Kong, markets are modestly higher, the HSI up around 0.4%, while the CSI 300 is down a touch in China. Over the weekend we saw profit results remain negative in y/y terms for June, albeit up from the May decline.
- Yuan Reference Rate at 7.1467 Per USD; Estimate 7.1686
- Bonds are firmer today with the CGB 10yr at +1.72%
CHINA: Country Wrap: China Industrial Profits Decline in June
Jul-28 05:15
- US and Chinese officials are meeting Monday to extend their tariff detente beyond a mid-August deadline, and haggle over other ways to further defuse trade tensions. Chinese Vice Premier He Lifeng and US Treasury Secretary Scott Bessent will lead the delegations through Tuesday in Stockholm — their third meeting in less than three months. The agenda includes discussions about how long the current tariff truce can be extended, as well as US levies tied to fentanyl trafficking and Chinese purchases of sanctioned Russian and Iranian oil. (source BBG)
- Over the weekend, the release of China's Industrial Profits for the year provided limited positive news for the current state for China's corporates.
- Industrial profits year-on-year declined -4.3% in June, following the decline of -9.1% in May. The year-to-date number declined further to -1.8% YoY from -1.1% in May. Intensive competition between companies has exacerbated deflationary pressures at a time when exports to the US remain pressurized. The auto sector particularly is seeing increased competition as EV manufacturers vie for sales. State-owned automakers Guangzhou Automobile Group and JAC Group have posted losses driven by the intense pricing pressure in the auto sector. The data showed the gap widening between state owned enterprises and private companies. State-owned firms recorded a 7.6% decline in profits in the first half. Private-sector companies reported a rise of 1.7% while foreign firms logged a 2.5% increase. China's authorities have stated this month that efforts to regulate aggressive price-cutting will be forthcoming, fueling expectations that a fresh round of industrial capacity cuts might be approaching. (source MNI)
- In Hong Kong, markets are modestly higher, the HSI up around 0.4%, while the CSI 300 is down a touch in China. Over the weekend we saw profit results remain negative in y/y terms for June, albeit up from the May decline.
- Yuan Reference Rate at 7.1467 Per USD; Estimate 7.1686
- Bonds are firmer today with the CGB 10yr at
