China Jun data dump still shows excess domestic supply

Asia Market Update: China Jun data dump still shows excess domestic supply > demand; JP yields edge up; Nvidia to sell H20 chip in CN again; Focus on US Jun CPI.

General trend

- China’s June data dump saw Q2 GDP beat estimates, above-par for China’s pre-designated growth rate of 5% for 2025. The lower-than-expected Retail Sales figures (despite govt trade-in programs and stimulus) combined with the outsize beat on Industrial Production did little to dispel the narrative that China continues to produce (and export) excess domestic supply. Lots of official comments after the data on the importance of growing the consumption side of the economy.

- China's June new home prices fell at the fastest monthly pace in 8 months. China property index -3.7%. China Vanke -4%.

- Some US analysts see a smaller chance of PBOC rate cuts in the near-term following June’s M2 acceleration in growth.

Another quiet day for Asian equities, with no stand out performers. (** Note: Markets focused on US Jun CPI tonight for potential direction).

- OIS chances of a BOJ rate hike again volatile, with an Oct 25bp hike up to 41.5% v 33% on Friday and Dec up to 65.5% v 57% on Friday. JPY was not helped, however, losing One Big Figure against the dollar over past 24 hours to trade at near 4-week lows.

- Japanese yields edged up at the long-end following 10-17bp rises yesterday. 10-year JGB’s edged up to highest since Oct 2008 (also equaled back in May), JP 30-yrs and 40-years +2bps while JP 20-year JGB yields rise to highest level since 1999.

- China chip-maker SMIC and NASDAQ FUTs briefly spiked after Nvidia saying they would resume H20 chip sales to China.

- A multitude of Japanese press outlets now predicting that the ruling LDP coalition will struggle to hold their majority at Sunday’s upper house elections. A Mainichi poll shows the coalition looks likely to hold in the range of 31-55 seats, versus the 50 seats needed to maintain a coalition majority.

- Australia July Consumer Confidence rose slightly, but last week’s Consumer Confidence fell a couple of percentage points.

- US equity FUTs +0.3% to 0.4% during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Tue July 15th (Tue night US Jun CPI).

- Wed ID BI Rate Decision (Wed night US Jun PPI, Fed Beige Book).

- Thu July 16th KR Jun Unemployment, AU Jun Jobs, JP Jun Trade Balance, (Thu night US Jun Retail Sales) TSM (TSMC) FQ2 earnings preview.

- Fri July 17th JP National CPI, (Fri night US Jun Housing Starts, Michigan Consumer Sentiment).

Holidays in Asia this week

- N/A.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.6% at 8,616.

- Australia July Westpac Consumer Confidence: 93.1 v 92.6 prior.

- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 86.5 v 88.6 prior.

- China Pres Xi on meeting Australia PM Albanese: Ready to work with Australian side to push bilateral ties further and make 'great progress' - financial press.

- Australia sells A$300M v A$300M indicated in 4.75% Jun 2054 Bonds; Avg Yield: 5.0527% v 4.9497% prior; bid-to-cover: 3.21x v 2.84x.

- Australia RBA proposes to remove surcharges related to debit and credit cards; From July 1st, 2026.

- New Zealand June REINZ House Sales Y/Y: +20.3% v +8.9% m/m.

China/Hong Kong

- Hang Seng opens +0.3% at 24,281; Shanghai Composite opens flat at 3,519.

- China NBS Official: Reiterates economic foundation needs to be consolidated - comments on June data.

- CHINA Q2 GDP Q/Q: 1.1% V 0.9%E; Y/Y: 5.2% V 5.1%E.

- CHINA JUN INDUSTRIAL PRODUCTION Y/Y: 6.8% V 5.6%E.

- CHINA JUN RETAIL SALES Y/Y: 4.8% V 5.3%E.

- CHINA JUN YTD FIXED URBAN ASSETS Y/Y: 2.8% V 3.6%E.

- China Jun YTD Property Investment Y/Y: -11.2% v -10.9%e.

- China Jun Surveyed Jobless Rate: 5.0% v 5.0%e.

- China Jun New Home Prices M/M: -0.3% v -0.2% prior.

- Nvidia: *To resume H20 sales to China; announces fully compliant GPU for China - US financial press.

- (US) Ambassador to NATO Whitaker: Secondary sanctions will target buyers of Russian oil; Cites India and China as major buyers of Russian oil [refers to sanctions mentioned by US Pres Trump earlier as part of Ukraine-Russia ceasefire effort] - comments to media.

- China holds Urban Work conference: China to accelerate construction of a new model of real estate development, - Xinhua.

- Tier1 analysts continue to think there is low chance of PBOC's RRR and policy rate cuts in the near-term after M2 growth accelerated in June.

- China PBOC Dep Gov Zou Lan: Reiterates will continue to implement a moderately loose monetary policy - H1 financial data press conference.

- CHINA JUN YTD AGGREGATE FINANCING (CNY): 22.83T V 22.431TE.

- CHINA JUN M2 MONEY SUPPLY Y/Y: 8.3% V 8.2%E.

- CHINA JUN YTD NEW YUAN LOANS (CNY): 12.92T V 12.70TE.

- China PBOC sets Yuan reference rate: 7.1498 v 7.1491 prior.

- China PBOC Open Market Operation (OMO): Injects CNY343B in 7-day reverse repos; Net injects CNY274B v injects CNY120B prior.

Japan

- Nikkei 225 opens +0.1% at 39,473.

- Japan Trade Negotiator Akazawa; Still arranging make-up of attendees for US National Day at Osaka Expo - press.

- Japan PM Ishiba and Trade Negotiator Akazawa will meet with Treasury Sec Bessent in Tokyo, July 18th.

- Japan Fin Min Kato: Will attend this week's G20 Finance Leaders meeting in South Africa.

- Japan MOF sells ¥300B vs. ¥300B indicated in 5-year Climate Transition Bonds; Yield at the Lowest Accepted Price: 1.098% v 0.8880% prior ; bid-to-cover: x v 3.19x prior.

- Mizuho CEO: Expects USD/JPY to decline to ¥135; 10-year JGB yield at current level is 'ok'.

- Former BOJ official Hayakawa sees rate hike odds as soon as October - Financial press.

- Follow up: EU, Japan reported to issue joint statement on economic alliance - Japanese press.

- Follow up: Further research by Mainichi Analysis shows Japan ruling LDP coalition may 'struggle' to hold majority – Nikkei.

Korea

- Kospi opens -0.2% at 3,194.

- South Korea May M2 Money Supply M/M: 1.0% v 0.2% prior.

- South Korea to spend KRW484B on the development of next-generation iLED display technology.

- South Korea cabinet adopts revision of Commercial Act expanding corporate boards' duty to 'all' shareholders - Yonhap- South Korea said to be considering to ease rules on US beef - South Korea press.

- LG Electronics: Launches South Korea's 'first' hybrid-reasoning AI model - financial press.

- South Korea Pres Lee: Instructs cabinet to draft an "efficient" budget for next year, and "boldly cutting" wasteful spending - financial press.

Other Asia

- Taiwan Finance Ministry: Taiwan fund mgmt committee has decided to continue equity market support - update.

- INDIA JUN CPI Y/Y: 2.1% V 2.3%E (~6-year low).

- India Foreign Min: Asked China to avoid restrictive trade measures (follows meeting China's Wang Yi in Beijing.

- India Trade Min Agrawal: Trade talks with US proceeding at fast pace.

North America

- (US) Pres Trump to travel to Pittsburgh, PA 12:30pm ET on Tuesday; [Potentially for AI Energy Summit] - financial press.

- US startups said to have raised $162.8B in H1, FY25, +75.6% y/y - Pitchbook.

- (MX) Follow up: Mexico calls US decision on tomatoes antidumping deal 'unjust' - financial press.

- (BR) Follow up: Brazil reported to potentially drop IOF tax on FORFAIT transactions - Brazil press.

- Senate Majority Leader Thune: Now is not the time to vote on more Russia sanctions; Will be ready to move on Russia sanctions if the time arises.

- (US) Pres. Trump: The United States of America has been ripped off on TRADE (and MILITARY!), by friend and foe, alike, for DECADES.

- (US) Cleveland Fed’s Inflation Nowcast sees June US CPI Y/Y (to be out tomorrow) to re-accelerate to 2.64% v 2.4% for May US CPI Y/Y; Sees July CPI Y/Y (to be out next month) to again accelerate to 2.70% (prior saw drop to 2.58%).

- (US) White House NEC Dir Hassett: Negotiations are ongoing with numerous countries and it is up to President Trump to sign off any deals; Won't speculate on 'me being Fed Chair' - CNBC.

- (US) Fed's Hammack (non-voter for 2025): See an economy that's really healthy; Inflation has made progress to Fed's target, but is still too high; Don't see imminent need to cut rates - Fox Business.

- (BR) Brazil plans to ask for a tariff reduction to 30%, and for a postponement of 90 days; May also ask for special coffee and orange terms - CNN Brasil.

- (MX) Mexico Pres Sheinbaum: Mexico and US have a 'Working scheme' until Aug 1st; Talks about Trump's 30% tariff threat.

- (US) Port of Los Angeles Jun TEUs 892.3K, +8.0% y/y; Busiest June ever for port (update).

Europe

- (EU) Follow up: EU has drawn up retaliatory tariffs against the US with a fresh list of products in case of no-agreement post Aug 1st - WSJ.

- (UK) Jun BRC LFL Sales Y/Y: 2.7% v 1.0%e.

- (CA) Canada May Wholesale Sales (ex-petroleum) M/M: +0.1% v -0.4%e.

- (EU) Trade Commissioner Sefcovic: Need systemic solution on China rare earth limits; Have seen some progress on rare earht fast-tracking to EU - comments to media.

- (DE) German Defense Min Pistorius: We've sent a letter of request to Washington for the procurement of typhoon long-range weapons; Germany will decide about the purchase following US's acceptance.

- (UK) BOE Gov Bailey letter to G20 Fin Mins & central bank governors: Since April, market conditions have improved and asset prices have recovered; Uncertainty continues to weigh on growth expectations.

Levels as of 01:20 ET

- Nikkei 225 +0.2% ASX 200 +0.6%, Hang Seng +0.3%; Shanghai Composite -0.7%; Kospi +0.1%.

- Equity S&P500 Futures +0.3%; Nasdaq100 +0.5%; DAX +0.2%; FTSE100 -0.1%.

- EUR 1.1660-1.1682; JPY 147.55-147.95; AUD 0.6540-0.6555; NZD 0.5968-5986.

- Gold +0.4% at $3,372/oz; Crude Oil -0.4% at $66.74/bbl; Copper -0.1% at $5.5245/lb.