Latest news with #CapitalEconomics
The Star
23 minutes ago
- Business
- The Star
Asia markets slip on renewed tariff tensions; Bangkok appoints new cenbank chief
Emerging Asian equities trended lower on Tuesday as investors took stock of regional governments' trade talks with the U.S., with Thai shares falling due to worries over the independence of the domestic central bank following a key appointment. Thailand's benchmark index fell over 1% after news that Vitai Ratanakorn, a perceived rate-cut advocate, would take the helm at the Bank of Thailand. The Thai baht slipped further, down 0.3% on the day. "Given the weakness of Thailand's economy, there is no doubt that the country needs lower interest rates," said Gareth Leather, senior Asia economist at Capital Economics, but added the appointment may fuel concerns about the bank's independence. Thai equities have risen over 8% since reports of Ratanakorn's appointment, anticipating monetary easing, but have also raised concerns about ongoing tensions between the BoT and the government regarding pressure for rate cuts. "While we have some sympathy with the government's argument that interest rates have been kept too high for too long, over the longer term, there is strong evidence that central bank independence tends to deliver better inflation outcomes," added Leather. Across the region, most stock markets were in the red, with Taiwan, South Korea and Malaysia posting losses between 0.3% and 1.5%. Taiwan equities extended their decline into a second session, giving back some of the 5% gain accumulated earlier this month. Meanwhile, Jakarta's benchmark continued to outperform, rising for a 12th straight session, underpinned by optimism following a recent U.S. trade agreement and domestic policy easing. Singapore's Straits Times Index also retreated from record highs after 14 sessions of fresh peaks. Investors are now focused on the Monetary Authority of Singapore's policy meeting on July 30. In the currency markets, regional units moved in tight ranges as the August 1 deadline loomed for Southeast Asian nations to strike trade deals with the U.S. or face sweeping tariffs. The South Korean won and Thai baht edged lower, while the Malaysian ringgit posted modest gains. The MSCI index of emerging market currencies held steady but remains down roughly 1% from its July 3 record high. "We are in a backdrop of a fragile global environment where events ranging from Japanese upper house elections to U.S. President Donald Trump's tariff threats continue to create much uncertainty and cloud the outlook for markets," said Maybank analysts. Japan's Nikkei closed lower, while the yen softened slightly after weekend election results delivered a setback to the ruling coalition, though the outcome was broadly in line with investor expectations. HIGHLIGHTS ** Indonesian 10-year benchmark yield flat at 6.519% ** Philippines' Marcos to meet Trump hoping to secure trade deal ** Thailand foreign tourist arrivals fall 5.91% annually so far in 2025 - Reuters
Yahoo
4 days ago
- Business
- Yahoo
Retail sales rebound, jobless claims: Consumer health check-in
Retail sales bounced back in June, with data showing a 0.6% increase — better than the 0.1% expected and the 0.9% decline seen in May. The latest initial jobless claims data hit a three-month low, indicating a low firing environment. Yahoo Finance Markets Reporter Josh Schafer breaks down the latest and what it signals about the health of the consumer. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. So we saw a rebound in retail sales in June. So you mentioned earlier sales increasing 0.6% in June. That was both the headline number and the number that's excluding auto and gas. The control group which sort of feeds into GDP that increased 0.5% in June. So really a relatively solid print here just on term in terms of the health of the US economy. Capital Economics North America Economist Thomas Ryan Wright just writing in a note to clients that this release just dispels any fears that overall consumer spending is faltering in response to tariffs. That's really what we're looking for within this release. And the other positive sign in economic data that we got this morning, too, Julie, initial jobless claims continue to move lower. Remember going back to May, we have been talking about initial claims continuing to tick higher each week. That's the number of Americans that are filing for new unemployment benefits every week. That came in at 221,000. That's the lowest level we've seen on that metric in three months. So not seeing real clear signs of layoffs here. We know hiring is still ticking lower in the labor market, but you're not seeing layoffs pick up which again, as we sort of talk about that Fed rate cut conversation, if claims were moving significantly higher, that would maybe boost the case for a cut, but the data not really boosting any sort of case for a cut this morning. Yeah, and one thing, one important caveat when you're looking at retail sales, they are not inflation adjusted. So they would account for if prices rose, and that's part of the increase in spending, that would uh that's how that would show up sort of in that number. Related Videos Fed Governor Waller thinks interest rates are over 1% too high What a GENIUS Act win would mean for bitcoin and crypto stocks Bank of America reports Q2 earnings beat Why Wall Street keeps shaking off tariff headlines Sign in to access your portfolio
New Straits Times
4 days ago
- Business
- New Straits Times
Japan's core inflation slows but stays above BOJ target, keeps hike bets alive
TOKYO: Japan's core inflation slowed in June but stayed above the central bank's two per cent target for well over three years, highlighting lingering price pressures that back market expectations for further interest rate rises. The data highlights the challenge the Bank of Japan (BOJ) faces in balancing mounting inflationary pressure and risks to the fragile economy from US tariffs, as it considers how soon to resume rate hikes from still-low levels. The core consumer price index (CPI), which excludes volatile fresh food costs, rose 3.30 per cent in June from a year earlier, data showed on Friday, matching a median market forecast. The rise was smaller than the 3.70 per cent increase in May due largely to resumption of petrol subsidies, but remained above the central bank's two per cent target for the 39th straight month. A separate index that strips away both fresh food and fuel costs — closely watched by the BOJ as a measure of domestic demand-driven prices — rose 3.40 per cent in June from a year earlier after increasing 3.30 per cent in May. "Underlying inflation remains elevated and is almost certain to overshoot the Bank of Japan's forecasts. However, with trade tensions looming large over the economy, the risk remains that the BOJ will stand pat for longer than we're anticipating," said Abhijit Surya, senior APAC economist at Capital Economics. The data will be among factors the BOJ will scrutinise at its next policy meeting on July 30–31, when the board is expected to revise up its inflation forecast in a quarterly review of its projections. Prices of food, excluding those of volatile fresh food like vegetables, rose 8.20 per cent in June from a year earlier, accelerating from the previous month's 7.70 per cent gain in a sign of the mounting cost-of-living pressures gripping households. The cost of staple rice nearly doubled from year-before levels, which led to a 19 per cent spike in the price of a rice ball and a 6.50 per cent increase in sushi dine-outs, the data showed. Service-sector inflation hit 1.50 per cent in June from 1.40 per cent in May, the data showed, suggesting that companies were passing on rising labour costs albeit at a slower pace than for goods. The BOJ exited a decade-long, radical stimulus programme last year and raised short-term interest rates to 0.50 per cent in January on the view that Japan was on the cusp of sustainably hitting its two per cent inflation target. While the central bank has signalled its readiness to raise rates further, the economic impact of higher US tariffs forced it to cut its growth forecasts in May and complicated decisions around the timing of the next rate increase. Japan's economy shrank in the first quarter as rising living costs hurt consumption. Exports fell in May for the first time in eight months, stoking recession fears. A slight majority of economists in a June Reuters poll expected the BOJ to forgo another rate hike this year.
Reuters
4 days ago
- Business
- Reuters
Japan's core inflation slows but stays above BOJ target, keeps hike bets alive
TOKYO, July 18 (Reuters) - Japan's core inflation slowed in June but stayed above the central bank's 2% target for well over three years, highlighting lingering price pressures that back market expectations for further interest rate rises. The data highlights the challenge the Bank of Japan (BOJ) faces in balancing mounting inflationary pressure and risks to the fragile economy from U.S. tariffs, as it considers how soon to resume rate hikes from still-low levels. The core consumer price index (CPI), which excludes volatile fresh food costs, rose 3.3% in June from a year earlier, data showed on Friday, matching a median market forecast. The rise was smaller than the 3.7% increase in May due largely to resumption of gasoline subsidies, but remained above the central bank's 2% target for the 39th straight month. A separate index that strips away both fresh food and fuel costs - closely watched by the BOJ as a measure of domestic demand-driven prices - rose 3.4% in June from a year earlier after increasing 3.3% in May. "Underlying inflation remains elevated and is almost certain to overshoot the Bank of Japan's forecasts. However, with trade tensions looming large over the economy, the risk remains that the BOJ will stand pat for longer than we're anticipating," said Abhijit Surya, senior APAC economist at Capital Economics. The data will be among factors the BOJ will scrutinise at its next policy meeting on July 30-31, when the board is expected to revise up its inflation forecast in a quarterly review of its projections. Prices of food, excluding those of volatile fresh food like vegetables, rose 8.2% in June from a year earlier, accelerating from the previous month's 7.7% gain in a sign of the mounting cost-of-living pressures gripping households. The cost of staple rice nearly doubled from year-before levels, which led to a 19% spike in the price of a rice ball and a 6.5% increase in sushi dine-outs, the data showed. Service-sector inflation hit 1.5% in June from 1.4% in May, the data showed, suggesting that companies were passing on rising labour costs albeit at a slower pace than for goods. The BOJ exited a decade-long, radical stimulus programme last year and raised short-term interest rates to 0.5% in January on the view that Japan was on the cusp of sustainably hitting its 2% inflation target. While the central bank has signalled its readiness to raise rates further, the economic impact of higher U.S. tariffs forced it to cut its growth forecasts in May and complicated decisions around the timing of the next rate increase. Japan's economy shrank in the first quarter as rising living costs hurt consumption. Exports fell in May for the first time in eight months, stoking recession fears. A slight majority of economists in a June Reuters poll expected the BOJ to forgo another rate hike this year.
Business Recorder
5 days ago
- Business
- Business Recorder
Australia dollar skids as jobless jump stokes rate cut pressure
SYDNEY: The Australian dollar slid on Thursday after jobs data badly missed forecasts and unemployment hit highs not seen since late 2021, stoking market wagers for a cut in interest rates. Employment rose by just 2,000 in June, when analysts had looked for a gain of 20,000, while unemployment climbed to 4.3%, from 4.1%, breaking a long run of stable readings. The jobless rate had held between 3.9% and 4.2% since late 2023 even as the broader economy slowed, a surprising resilience that gave the Reserve Bank of Australia scope to hold rates at 3.85% this month to await more data on inflation. The Aussie quickly fell 0.7% to $0.6487 in reaction as markets lifted the already elevated chance of a quarter-point move in August to around 90%. The implied floor for rates also dipped to 3.05%, from 3.12% ahead of the jobs figures. 'The upshot is that the RBA is almost certain to cut rates by 25bp at its meeting in August,' said Abhijit Surya, a senior APAC economist at Capital Economics. 'In fact, a larger 50bp cut could be on the table again if inflation data due by the month end confirm that inflationary pressures remain benign.' The consumer price report for the June quarter is out on July 30 and analysts had already assumed a manageable rise of 0.6% to 0.7% in core inflation would open the door to a cut. The likelihood of lower cash rates saw three-year bond futures jump 8 ticks to 96.570, and away from a two-month low of 96.45 hit the previous session. Yields on 10-year bonds dipped 4 basis points to 4.354%. The kiwi dollar eased in sympathy to $0.5925, having been as low as $0.5914 overnight. Support lies around $0.5884, with resistance at $0.5980. New Zealand data showed a sharp 1.2% jump in food prices in June which lifted annual growth to 4.6%. Prices for butter alone were up almost 47% on the year. Satish Ranchhod, a senior economist at Westpac, said the overall CPI could pick up to 2.8% in the June quarter, from 2.5% the previous quarter and above the Reserve Bank of New Zealand's forecast of 2.6%. The central bank paused its rate cuts this month to await the full inflation report, but indicated further easing was likely given the amount of spare capacity in the economy.
