Asia Morning Bites: Inflation Data in Focus, FOMC, ECB, and BoJ Meetings Ahead

Asia Morning Bites

The data calendar in Asia today is focused on inflation in Singapore while Taiwan reports industrial production figures. FOMC, ECB and BoJ meetings later this week will add some excitement.

 

Global Macro and Markets

• Global markets:  US equity markets moved sideways for much of Friday, finishing almost unchanged from the previous day. Equity futures are pointing to a similarly inconclusive start today, which is perhaps not surprising during the FOMC week. Chinese stocks were also somewhat directionless, with the CSI 300 also failing to make any ground, though the Hang Seng index did gain 0.78%. There wasn’t much going on in US Treasury markets either. The yield on the 2Y US Treasury was virtually unchanged at 4.837%, while the 10Y yield dropped by only 1.5bp to 3.835%. There was a bit more action in FX space, where EURUSD dropped sharply to 1.1130, erasing some of the gains of the previous week. Other G-10 currencies also lost ground, though Cable was pretty steady maybe helped by better inflation data at the end of last week. Asian FX struggled against the USD on Friday. The worst-performing currencies were the THB and KRW.  The INR has been extremely stable at just under USDINR 82.0, which given the weakness across other FX pairs, suggests that it is being actively managed at around this level.

 

• G-7 macro:  Friday was a quiet day for G-7 Macro data, but today, we will be inundated with plenty of PMI numbers from across the G-7 for both the service and manufacturing sectors.

 

• Taiwan:  June industrial production probably turned more negative again after a slight bounce in May. The year-on-year growth rate is forecast to drop back to -16.49% by the consensus, though we think the drop may be even more pronounced, and expect a fall of about 18% YoY. This is mainly a statistical correction, as it does appear that production is bottoming out at around current levels.

 

• Singapore: June inflation is set for release today.  Both headline and core inflation are expected to dip with favourable base effects helping force both numbers lower.  Headline inflation is expected to slip to 4.4%YoY (from 5.1%) while core inflation could dip to 2.4% (from 2.8%).  Moderating inflation could give the MAS some breathing room and we expect slowing inflation and slightly better-than-expected 2Q GDP to be factored into the MAS decision later in 4Q. 

 

What to look out for: Key moves from major central banks

• New Zealand trade balance (24 July)

• Japan Jibun PMI and department store sales (24 July)

• Singapore CPI inflation (24 July)

• Malaysia CPI inflation (24 July)

• Taiwan industrial production (24 July)

• Thailand trade balance (24 July)

• South Korea 2Q GDP (25 July)

• Bank Indonesia policy meeting (25 July)

• Hong Kong trade (25 July)

• US Conference board consumer confidence (25 July)Australia CPI (26 July)

• Singapore industrial production (26 July)

• US new home sales (26 July)

• US FOMC decision (27 July)

• China industrial profits (27 July)

• ECB policy decision (27 July)

• US personal consumption, durable goods orders initial jobless claims (27 July)

• South Korea industrial production (28 July)

• Japan Tokyo CPI and BoJ policy (28 July)

• Australia PPI (28 July)

• US personal spending, core PCE, University of Michigan sentiment (28 July)