Asia Morning Bites: Trade Data Updates for Mainland China, Taiwan, and More

Asia Morning Bites

Mainland China and Taiwan trade data for July today ahead of China's inflation release tomorrow.

 

Global Macro and Markets

• Global markets:  US stocks started the week in better form than they finished the last one, with the S&P 500 rising 0.9% and the NASDAQ gaining 0.61% on Monday. It is not clear that this is going to last though. US equity futures look slightly negative currently, though are wavering around a flat open. Chinese stocks didn’t start the week so well. The Hang Seng was basically flat on the day while the CSI 300 fell 0.76%. After their big post-payrolls fall, Treasury yields didn’t do much on Monday. The 2Y yield was only 0.2bp lower, while 10Y yields rose 5.5pb to 4.088%. The Fed’s Michele Bowman repeated her view that there would need to be more rate hikes, and Williams said he saw restrictive rates for some time. EURUSD is still managing to hold above the 1.10 level but tested the downside on Monday. The rest of the G-10 FX basket was very mixed. The AUD remains flat. Cable made some decent gains, while the JPY has weakened back to 142.45 despite comments from Bank of Japan Governor Ueda that currency was considered when making policy decisions. Most of the Asian FX pack lost ground to the USD on Monday. The PHP weakened by 0.51% on the day, the worst of the pack, but we also saw the CNY losing ground again and pushing above 7.19.

 

• G-7 macro: There were no macro releases of any note on Monday, and it is pretty thin pickings today with final German July CPI data, and the US NFIB survey the main offerings as well as US June trade data.  

 

• China:  Trade data for July is expected sometime today. We expect another set of negative year-on-year figures for exports and imports, though we may see the rate of decline abating slightly, and are not expecting exports to contract as much as the consensus expectation for a 13.3% YoY decline, worse than the 12.4% fall for June.

 

• Taiwan:  Further double-digit declines in Taiwan trade figures look likely for July, though we see some signs that the semiconductor cycle may be troughing. That could see some moderation in the rate of decline relative to the consensus and to last month’s figures.

 

• Japan:  Both labour cash earnings and household spending results in June were below the market consensus. The market had expected earnings to improve as April’s wage negotiations were likely to be meaningfully reflected in June’s payment. Instead, labour cash earnings slowed to 2.3% YoY in June (vs 2.9% in May, 3.0% market consensus). Contracted earnings (1.5%) were little changed from the previous month (1.6%) while bonus payments, which are quite volatile month-by-month, rose only 3.5% in June compared to the previous month’s 35.9%. In a separate data report, household spending deepened its contraction to -4.2% YoY in June (vs -4.0% in May, -3.8% market consensus). However, in terms of the monthly comparison, real spending rebounded 0.9% MoM sa in June  - the first rise in five months and real worker spending rose for the second consecutive month. We still think that real household spending will continue to improve in the third quarter, supported by wage growth and a slowdown in inflation.

 

• Philippines:  June trade figures will be reported today.  The market consensus points to a contraction for both exports and imports with the overall trade deficit remaining at a sizable $4.5bn.  Exports will likely revert to negative growth as demand for electronics shipments stays soft amidst weak global demand.  Meanwhile, imports are also likely to contract as energy imports become less expensive.