Softer than expected US inflation data drags US yields down again. Australia’s unemployment rate drops, but falling hours worked indicate a softer labour market. Taiwan’s central bank holds rates, but the Bank of Japan could hike later today.
In our bonus deep dive interview, ANZ Senior China Strategist Zhaopeng Xing explains why additional stimulus should be expected sometime later this year, as China’s domestic demand remains weak.
5 things to know:
US wholesale prices fell unexpectedly in May. That drove US Treasury yields down 4-5 bps. US stocks were up 0.3% by 5 am Sydney/Melbourne time. The Aussie dollar was down 0.4% at 66.34 USc and the Kiwi was at 61.70 USc. ANZ Head of G3 Economics Brian Martin talks about that surprise US PPI fall.
Australia’s unemployment rate fell from 4.1% to 4% in May as jobs growth of 39,700 beat forecasts. However, ANZ Senior Economist Blair Chapman says a 0.5% decline in hours worked indicates the labour market is still loosening.
Blair says the data appears broadly in line with what the Reserve Bank of Australia would have been expecting to see.
Taiwan’s Central Bank left its key rate on hold at 2%, as expected. ANZ Chief Economist for Greater China Raymond Yeung says the CBC did lift banks’ reserve requirement ratio by 25 bps and tightened LVR ratios to cool the property market.
ANZ Senior Rates Strategist Jack Chambers expects the Bank of Japan to hike 15-25 bps later today, particularly after officials talked up the Yen much more hawkishly in recent weeks.
Cheers
Bernard
PS: Catch you next week as we look to the RBA’s rate decision on Tuesday.
