Asia Morning Bites
Big week coming up for Asia
Global Macro and Markets
- Global Markets: No big surprises from the PCE inflation data on Friday allowed US Treasury yields to fall further in anticipation of September rate cuts. The market is now more than fully pricing in a 25bp rate cut in September, though seems to have written off a cut at this week’s FOMC meeting, which seems reasonable. By the year end markets are now closer to pricing in three rather than two rate cuts. 2Y Treasury yields fell 4.1 basis points on Friday and 10Y yields fell 4.7bp taking them down to 4.194%. EURUSD hasn’t moved much and is still hovering around the 1.0850 level. The AUD, which has been hard-hit by the JPY carry unwind is also treading water at the mid-65 cent level as the JPY stabilises at about 154.15 ahead of this week’s Bank of Japan rate meeting (we are looking for a 15bp hike). Cable is also fairly steady at 1.2868. In Asian FX apace, the USDCNY moved higher on Friday after its recent gains and is now 7.2505. The IDR also lost some ground, rising to 16290. At the other end of the spectrum, the THB made some modest gains and USDTHB has dropped to 35.926.
- G-7 Macro: As mentioned, there weren’t any big surprises in the PCE inflation data on Friday. The headline PCE index rose 0.1% MoM enabling the inflation rate to edge down to 2.5% YoY from 2.6%. The core index rose 0.2% MoM as expected, but on rounding, stayed at 2.6% YoY, rather than falling to 2.5% as expected. US personal incomes for June rose slower than expected, rising only 0.2% MoM (0.4 expected) but spending grew 0.3% MoM. University of Michigan consumer confidence data rose modestly, close to expectations. The G-7 calendar lacks much interest today.
- Vietnam: We get most of Vietnam’s macro releases for July today, including CPI inflation, trade and retail sales data. The inflation numbers have been running very close to the central bank's 4.5% upper target (4.34% in June) and retail sales have also been running hot at about 9% YoY. So it will be interesting to see if there is any sign of cooling in today’s data. We are not expecting any remedial central bank rate action soon given some of the issues in the banking sector. But there are clearly some issues that need watching with this economy and it could be the currency where we see the adjustment coming absent any official action.
- Rest of Asia: It's a very big week for the region with the Bank of Japan meeting on 31 July and some critical June and 2Q24 inflation data for the Reserve Bank of Australia. We have a quiet Monday to get ready for this.
What to look out for: Vietnam July inflation and activity data
July 29th
Vietnam: July CPI inflation, Industrial Production, Retail sales and Trade
July 30th
Japan: June Jobless Rate, Job-To-Applicant Ratio
Australia: June Building Approvals
US: Conf. board consumer confidence
Singapore: June Unemployment rate
July 31st
S Korea: June industrial production
Japan: June retail sales, industrial production, Housing starts, BOJ target rate
China: July Manufacturing & Non-manufacturing PMIs
Australia: June retail sales, CPI
Taiwan: 2Q Advance GDP
India: June Fiscal deficit
August 1st
US: FOMC rate decision
S Korea : July trade balance, Imports & exports, Manufacturing PMI
Japan: Jibun Bank Manufacturing PMI
Australia: June trade balance, Imports & exports
China: July Caixin China PMI
Philippines: July Manufacturing PMI
India: July Manufacturing PMI
Indonesia: July CPI
August 2nd
S Korea: July CPI
Japan: July monetary base
Australia: July PPI
Singapore: PMI
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