Asia Morning Bites

Australia reports trade this morning, and Taiwan releases June inflation data. US Fed minutes showed officials in favour of additional rate hikes. Busy day for US data ahead of Friday's payrolls.

Global Macro and Markets

• Global markets:  It was the turn of the back end of the yield curve to rise yesterday. 10Y US Treasury yields rose 7.7bp to 3.932%. But despite some fairly hawkish Fed minutes, the front end didn’t move much. 2Y yields rose only 0.9bp to 4.945%. US equities opened lower yesterday, but after a choppy day which lacked direction, finished only slightly down. The S&P 500 ended 0.2% lower while the NASDAQ fell 0.18%. The USD continued to find support from the Fed outlook, and EURUSD moved down to 1.0855. Other G-10 currencies also lost ground.  The JPY remains at 144.43, similar to this time yesterday, though it has been quite volatile. Most of the Asian FX pack lost ground to the USD yesterday. The CNH has traded back up above 7.26.
• G-7 macro:  Despite what was clearly a meeting with considerable differences of opinion, and very low conviction on the way forward, the key element to the June FOMC minutes seems to be that “almost all” officials thought more tightening would be needed this year. Here’s a link to the transcript. Today, we have the ADP survey of employment, jobless claims, and the service sector ISM survey, all coming ahead of tomorrow’s payrolls.
• Taiwan: June inflation data will remain subdued, with consensus estimates targeting a 1.8%YoY inflation rate, slightly down from the 2.02% reading in May. Core CPI is running slightly higher, but not much, and could also decline slightly from the 2.57% May reading. This all suggests that Taiwan’s central bank need not follow the Fed if they decide to hike rates again this month, as now looks likely.

What to look out for: US ADP and Australia trade

• Australia trade (6 July)

• Taiwan CPI inflation (6 July)

• US ADP employment, initial jobless claims, trade balance, ISM services (6 July)

• South Korea BOP balance (7 July)

• Taiwan trade (7 July)

• US NFP (7 July)