Japan
- BOJ keeps interest rate steady by unanimous vote
- No changes in the existing bond tapering plan until Mar. 2026
- Revision in QT plan. BOJ will halve the quarterly reduction amount from fiscal 2026 so that monthly purchases fall to around 2 trillion yen by March 2027.
- Japan is scrambling to find ways to get U.S to exempt Japan's automakers from 25% automobile industry-specific tariffs, which are dealing a blow to the country's manufacturing sector. Japan also faces a 24% 'reciprocal' tariff rate starting on July 9 unless it can negotiate a deal with Washington. Japan's automobile sector accounted for about 28% of the total 21 trillion yen ($145 billion) worth of goods the Asian country exported to the U.S. last year
China
- However, retail sales rose 6.4%, much quicker than a 5.1% increase in April and forecasts for a 5.0% expansion, marking the fastest growth since December 2023.
Industrial output grew 5.8% from a year earlier, National Bureau of Statistics data showed on Monday, slowing from 6.1% in April and missing expectations for a 5.9% rise in a Reuters poll of analysts. It was the slowest growth since November last year. (An extended "618" shopping festival, one of China's largest online retail events by sales, started earlier than usual this year, helping lift consumption.)
- Data released earlier this month showed China's total exports expanded 4.8% in May, but outbound shipments to the U.S. plunged 34.5%, the sharpest drop since February 2020.
- China's producer deflation deepened to its worst level in almost two years in May while consumer prices extended declines, as the economy grappled with trade tensions and a prolonged housing downturn.
- China May PPI -3.3% y/y, worst in 22 months. -2.7% YoY(April). Persistent deflationary pressure
- Core inflation +0.6% y/y, but analyst warn of fragility
- China's central bank will lower the borrowing cost of its seven-day reverse repurchase agreements, its benchmark interest rate, by 10 basis points (bps) to 1.40%, effective May 8. Other interest rates will drop in line with the key rate.
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USD/KRW exchange rate: 1,356.00원
USD/JPY exchange rate: 144.28엔
USD/CNY exchange rate: 7.1640위안
CNY/KRW exchange rate: 189.43원
DXY: 97.23
US Treasury 30Y yield: 4.843%
US Treasury 10Y yield: 4.283%
US Treasury 2Y yield: 3.744%
KTB 30Y yield: 2.714%
KTB 10Y yield: 2.781%
KTB 3Y yield: 2.447%