Asia Morning Bites: China's Inflation Report, Global Markets, and Upcoming Economic Indicators

Asia Morning Bites

Monday features China's inflation report which should show both CPI and PPI reflecting weak demand.

 

Global Macro and Markets

• Global markets:  US equities didn’t much like Friday’s labour market report, though they didn’t hate it either. The S&P 500 fell 0.29% while the NASDAQ lost 0.13%. US equity futures are looking a little brighter currently. Chinese stocks also had a disappointing end to the week. The Hang Seng fell 0.9% while the CSI 300 dropped 0.44%. US Treasuries were also a little unsure how to react to the labour report. The yield on 2Y US Treasuries fell 3.5bp, but yields on the 10Y UST rose 3.2bp to 4.062%. The USD weakened against the EUR on Friday. EURUSD rose to 1.0964. Other G-10 currencies were also strong, including the JPY, which has tended to strike its own path recently. USDJPY has fallen to 142.22. Friday was a mixed day for the Asia FX pack. The CNH made some modest gains, falling to 7.2328, but most of the rest saw modest losses, which they may well recoup in early trading today.
• G-7 macro:  The US labour report on Friday showed some welcome signs of slowdown in hiring, especially after the much stronger than expected ADP survey earlier had increased anxiety about a much bigger number, but it was a very mixed story, with a falling unemployment rate, and sticky wages all indicating that the Fed will be hiking again in July. James Knightley provides more detail in this note.

  In terms of the numbers, non-farm payrolls rose 209 thousand, the unemployment rate declined from 3.7% to 3.6%, and average hourly wages growth was unchanged at 4.4% YoY. There isn’t much on the G-7 calendar of note today.

• China: PPI data for June will likely show a further deterioration from the -4.6% YoY May figure, weighed down by weak demand. Aggregate finance data is released this week, possibly as soon as today. We should see an increase over the May figure of CNY1362bn, but probably less than last year’s June number of CNY2806bn. The consensus estimate is about CNY2300bn.

 

What to look out for: China inflation

• China CPI inflation (10 July)

• Japan trade balance (10 July)

• US wholesale inventories (10 July)

• Australia Westpac consumer confidence and NAB business confidence (11 July)

• Philippine trade (11 July)

• South Korea unemployment (12 July)

• Japan PPI inflation (12 July)

• New Zealand RBNZ policy (12 July)

• India CPI inflation (12 July)

• US MBA mortgage application, CPI inflation (12 July)

• South Korea trade and BoK policy (13 July)

• China trade (13 July)

• US PPI inflation (13 July)

• Singapore GDP (14 July)

• Japan industrial production (14 July)

• India trade (14 July)

• US import prices and University of Michigan sentiment (14 July)