Asia Morning Bites: Philippine Inflation and Singapore Retail Sales Awaited

Asia Morning Bites

Philippine inflation and Singapore retail sales are all slated for release today.

Global Macro and Markets

Global markets: With the US on vacation yesterday, there wasn’t much going on in global markets. Chinese stocks made small gains, while European bourses were mostly in the red. Bond markets generally saw yields make small declines at the front end of the yield curve, but 10Y yields rose slightly except in the UK and Australia, where they dropped very slightly following the RBA’s (Reserve Bank of Australia) no-change rate decision. In currency space, EURUSD moved lower to 1.0881. The AUD dropped sharply after the RBA but recovered and ended slightly higher on the day at 0.6692. Cable also made gains, rising to just under 1.2740 before easing back down to 1.2714. The JPY made slight gains and is currently 144.47. Most of the Asia FX pack made gains against the USD, led by the KRW and THB. The CNY moved down to 7.2163
G-7 macro: A slight shrinkage in Germany’s trade balance yesterday was the main data from Tuesday. Here’s Carsten Brzeski’s take on the data. European Service sector and composite PMI numbers dominate the calendar today. The US releases final durable goods numbers and vehicle sales.
Australia: The RBA left rates on hold at 4.1% yesterday, though signalled a willingness to hike again dependent on the flow of data. Our expectation is that the RBA will hold fire again in August, as we expect further downward progress in inflation, but that they will hike once more in September, as inflation progress at that point may be hampered by electricity price rises in July (data released later). We think (hope) that this will be the last hike in the current cycle.
Singapore: Retail sales for May will be reported today. Market consensus points to a modest 1.9%YoY gain. Sales may have been supported by a resurgence of visitor arrivals, countering the likely negative fallout from still elevated inflation. We can expect this trend of modest expansion to continue in the near term until inflation cools off further by the end of the year.
Philippines: Inflation numbers will be released this morning. June inflation will likely slow down further from the 6.1%YoY expansion recorded in the previous month with consensus suggesting a slide to 5.5%YoY. Moderating inflation will give newly minted Governor Remolona space to extend the BSP's recent pause and we could see the central bank on hold for at least the next couple of meetings.