|
Disappointing inflation data already out from Australia suggest a higher peak cash rate. Singapore inflation data are out later
|
|
Macro outlook
- Global markets: Happy Chinese New Year to all our readers.
- US equity markets regained their composure at the end of last week, and have traded more or less sideways since then, so there is not too much to catch up on after the recent holidays in Asia. The S&P500 is now at 4016.95, which leaves it slightly above its 200-day moving average. The early part of this week saw US 2Y Treasury bond yields rising sharply, before drifting slightly lower again yesterday. The current 2Y yield is 4.21%. 10Y US Treasury yields have performed a similar rise then decline, currently at 3.45%. EURUSD pushed above 1.09 last Friday but has been trading just south of that in the first two days of this week. There is a mixed performance from other G-10 currencies. The AUD is looking firm against the USD, trading above 70 cents currently. But sterling is softer at 1.2332. And the JPY is holding at about 130, just slightly stronger after a weak start to the week. In other Asian FX, there isn’t much action given the Chinese New Year holidays in much of the region. The INR has been losing ground on reports of USD buying by Indian oil companies.
- G-7 Macro: Since we went on holiday, the most notable G-7 releases have been a bunch of PMI figures out of Europe, which painted a slightly less bleak picture of the economy than for some time, with the composite PMI just clawing its way back above the 50 threshold boom/bust level. Today, we get more colour on Germany from the Ifo business index. And the Bank of Canada will most likely raise rates a further 25bp taking policy rates to 4.5%
- Australia: Another big upside miss to the Australian CPI data, with December inflation rising from 7.3% to 8.4% YoY. This increase took the 4Q22 inflation rate up to 7.8% YoY from 7.3%. Both weighted median and trimmed mean measures of inflation also rose. We've had our cash rate forecast under "double-secret probation" for the last month, and see no other course of action than to raise this from 3.6% to 4.1%, by extending the Reserve Bank's hiking activity a further 2 months.
- Singapore: December 2022 inflation is due for release later today. The market consensus points to headline inflation easing slightly to 6.6%YoY while core inflation is likewise expected to soften to 5.0%YoY (from 5.1% previously). Despite the slight dip in inflation, price pressures remain evident and core inflation is still well above the Monetary Authority of Singapore’s (MAS) inflation target of 2%. The recent rebound of the SGD means that the MAS may not need to tinker with policy just yet but we do expect the MAS to be mindful of the SGD’s appreciation which could eventually weigh on an already challenged export sector.
|
|
What to look out for: Australia and Singapore inflation
-
Australia CPI inflation (25 January)
-
Singapore CPI inflation (25 January)
-
Bank of Thailand policy (25 January)
-
US mortgage applications (25 January)
-
South Korea GDP (26 January)
-
Philippines GDP (26 January)
-
Singapore industrial production (26 January)
-
Hong Kong trade (26 January)
-
US GDP, personal consumption, core PCE, initial jobless claims (26 January)
-
Japan Tokyo CPI inflation (27 January)
-
Australia PPI inflation (27 January)
-
US personal spending and University of Michigan sentiment (27 January)
|
|
| Read this article on THINK |
Tags
Emerging Markets Asia Pacific Asia Markets Asia economics
Disclaimer
This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
