- China's PMI folks appear to be calling for more urgent stimulus
- Australian Private Sector Credit for April +0.6% m/m (prior +0.3%)
- Australia data: Q1 Construction Work done +1.8% (expected +0.5%)
- China Official May PMIs: Manufacturing 48.8 (expected 51.4) Services 54.5 (expected 54.9)
- Australian CPI for April 6.8% y/y (expected 6.4%)
- PBOC sets USD/ CNY mid-point today at 7.0821 (vs. estimate at 7.0764)
- New Zealand business confidence improves in May from April but still very weak
- US debt limit bill advances to House for voting
- Reserve Bank of Australia Governor Lowe testimony recap - pain ahead for households
- PBOC is expected to set the USD/CNY reference rate at 7.0764 – Reuters estimate
- Bank of Japan Governor Ueda says higher CPI is supply-driven inflation
- Goldman Sachs China PMI preview - leading indicator suggests manufacturing stabilising
- Japan data: April Industrial Production (preliminary) -0.4% m/m (expected 1.5%)
- PIMCOs base case is an Australian recession, expecting a soft landing is a fool’s paradise
- UK business confidence slips lower in May
- RBA Gov Lowe says wage growth has not been a source of inflation
- Oil - Cushing stockpiles mount, up 1mn+ barrels according to Wood Mackenzie data
- BoA says the Fed's 3 conditions for a rate hike have been met
- RBC has hiked its forecast for the US S&P500 index - tech rally
- Japan has issued an emergency warning /evacuation notice over North Korea missile threat
- PIMCO says a US recession is its base case, possibility it's a deep one
- Forexlive Americas FX news wrap 30 May: US yields move lower helped by sharply lower oil
- ECB's Centeno said inflation is easing, doesn't see a risk of monetary policy overshoot
- ICYMI: ECB's Simkus sees June and July rate hikes; says too early to make a September call
- Trade ideas thread - Wednesday, 31 May 2023
- US stocks close near unchanged as early enthusiasm wanes
The key focal point of the session was the China data, the official PMIs for May. Both the Manufacturing and non-Manufacturing PMIs fell from April, with Manufacturing slipping further into contraction. Large enterprises (many state-owned and supported) fared better than mid-size and small, coming in at 50.0, 47.6 and 47.9 respectively. China’s National Bureau of Statistics (NBS) issued a statement following the data calling for measures to strengthen the foundation for recovery and development.
Risk assets took a hit on the China results. EUR, GBP, AUD, NZD, CAD are all lower against the US dollar. US equity index futures have also slipped a little lower.
We also had data from Australia today, most notably the monthly CPI report. Headline inflation in April in Australia came in at 6.8%, above the consensus expectation of 6.4%. The impact was cushioned somewhat by the CPI excluding volatile items and holiday travel at 6.5%, down from 6.9% in March. The high headline was also partly explicable by the dropping out of petrol (gasoline) excise (tax) relief that expired at end March, sending prices higher. The Australian dollar was marked higher initially on the CPI number, only to be slammed lower (once shorts taken out … cough) on the China PMIs. The Reserve Bank of Australia will be eyeing this inflation data nervously, the higher-than-expected April CPI is going to make hitting the RBA inflation forecast for Q2 a tight-run thing and increases, at the margin, the prospect of a June rate hike from the Bank.
Other data from Australia today showed private sector credit growth m/m and a beat on Q1 Construction Work Done. Residential construction declined but was offset by engineering work.
On US debt limit news, the bill agreed to by Biden and McCarthy passed through a House Committee (by just one vote) and will now go to the full House for a vote, expected Wednesday.
Both Reserve Bank of Australia Governor Lowe and Bank of Japan Governor Ueda spoke today, see bullets above.
Asian equity markets:
Japan’s Nikkei 225 -1.1%
China’s Shanghai Composite -0.7%
Hong Kong’s Hang Seng -2.0% ... its even lower as i update down more than 2% now
South Korea’s KOSPI -0.2%
Australia’s S&P/ASX 200 -1.3%
AUD/USD spiked on the CPI and was hit lower on China PMIs:
