BoJ hikes and RBA holds as expected

Asia market update: BOJ hikes and RBA holds as expected; Weakest CN retail sales since Covid; US FOMC tomorrow night.

General trend and developments

-The Bank of Japan delivered its expected 25bps hike to 1.00%, its highest rate since 1995. Markets largely brushed off the decision as JPY was unmoved, if anything slightly weaker post-decision. However, Japanese yields in the belly- and end- of the curve moved up noticeably post-decision, adding a further 5-6bps on top of their +2-3bps rises prior the decision.

- Attention now on the 02:30am ET Dep Gov Uchida-led press conference in the absence of Gov Ueda due to his hospital stay for an operation. Overall, the vote split of 7-1 (just Asada dissenting) along with reiteration of intent to keep raising rates in response to prices and economy in addition to the confirmation of a bond taper pause not until April, 2027 all indicate that markets need to be prepared for at least the possibility of further BOJ hikes going forward. [Note overall the BOJ’s JGB bond holdings forecast to fall by approx 36-30% by Mar-2030 compared to the start of the taper in Jun-2024. BOJ also says will not conduct interim assessments of the plan for the outright purchases of JGBs in the future].

-Australia’s RBA held rates as expected, following three successive hikes earlier this year. The key line from the statement was in-line with recent RBA speakers; “Following the three increases in the cash rate target since the beginning of the year, financial conditions are now tighter than they were, and there are signs that the economy is slowing as expected”. Overall a balanced statement, noting that the RBA is now “well-placed” but leaving a nod in the last sentence that the bank will hike again if required. Aussie dollar fell back slightly below 70.50/USD post-decision with former RBA Gov Lowe’s employer, investment banker Barrenjoey stating that the RBA is likely done hiking rates.

-China’s Retail Sales for May at -0.6% an even worse contraction in domestic demand than expected. Notably the first contraction since the end of pandemic-era restrictions in December 2022. Predictably, at the other end of the scale, continued heavy investment in industry and exports in particular saw May Industrial Production edge out expectations. May Fixed Urban Assets continued to fall sharply on a y/y basis, while the property market gloom refused to lift in terms of raw numbers as Property Investment fell even more than sharp fall expected.

-No change in Middle East status, amid the continued wait for the actual text of the MoU, which depending on which side you listen to will likely require all of the time available through Friday for the US and Iran to hammer out any mutually agreed terms, assuming that is possible.....

-US government/Anthropic initial talks give zero clarification on Fable 5 / Mythos status. Notably Anthropic only sent technical staff with no major figures on the US govt side reported in attendance either. The White House said it will probably take “more than a few days” to reach a resolution that eases export restrictions on the company’s newest AI model.

-South Korea import prices fell for a second month in May as export prices continued to surge amid the AI chip memory export boom.

-SpaceX had an excellent second day of trading Monday, with regular session gains of +19.5% leading to a total +23% gain including after-hours - all the way to $199/share.

-Central Bank week: BOJ/RBA today, to be followed by US Fed (tomorrow night), UK BOE, Swiss SNB, Norway, Sweden, Norway, Brazil, Chile, Taiwan, Philippines, Indonesia, Ukraine, Czech, Russia.

-US equity FUTs -0.1% to flat during Asia trading.

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

-Tue Jun 16th: (Tue night UK May CPI).

-Wed Jun 17th: JP May Trade Balance, (Wed night, US May Retail Sales, US Fed Rate Decision).

-Thu Jun 18th: NZ Q1 GDP, ID Rate Decision, TW Rate Decision, (Thu night, UK BoE Rate Decision).

-Fri Jun 19th: JP May National CPI, (Note: Juneteenth — US markets closed, reduced liquidity).

Holidays in Asia this week

-Tue Jun 16th: Indonesia.

-Wed Jun 17th: Malaysia.

-Fri Jun 19th: China, Hong Kong, Taiwan, US.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens -0.8% at 8,846.

-(AU) Australia Central Bank (RBA) leaves cash rate unchanged at 4.35%; As expected.

-(AU) Australia ACCC: Report note airlines have increased airfares and reduced flights on some routes as fuel costs rise.

-(AU) APRA updates requirements to strengthen governance across banking, superannuation and insurance; Effective from early 2028.

-(AU) Australia ANZ Roy Morgan Weekly Consumer Confidence: 70.7 v 70.8 prior.

-(NZ) New Zealand May Food Prices M/M: 1.0% v 0.0% prior.

China/Hong Kong

-(CN) Shanghai Composite opens -0.1% at 4,094; (HK) Hang Seng opens -0.1% at 24,826.

-(CN) Chinese Economic Data Release: China May Retail Sales Y/Y: -0.6% v -0.2%e (lowest since Dec 2022); (CN) China May Industrial Production Y/Y: 4.5% v 4.4%e; (CN) China May YTD Fixed Urban Assets Y/Y: -4.1% V -2.3%E.

-(CN) China NBS [China stats agency]: China's economic foundation needs to be strengthened - comments post June "data dump".

-(CN) PBOC Deputy Governor Zou Lan: China's Central Bank calls for efforts to promote tech-based financial innovation, deepen digitization in finance area - China International Financial Exhibition.

-(CN) China Iron and Steel Association [CISA] Official: Expect China's 2026 steel demand to dip slightly.

-(CN) China May YTD Property Investment Y/Y: -16.2% v -14.0%e.

-(CN) China May Surveyed Jobless Rate: 5.1% v 5.2%e.

-(CN) China May New Home Prices M/M: -0.2% v -0.2% prior.

-(CN) China's President Xi meets with Myanmar President in Beijing - Chinese State Media.

-(CN) China PBOC sets the yuan mid-point at 6.8108 v 6.8088 prior.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY450B in 7-day Reverse Repos; Net injects CNY297B v injects CNY207B prior.

Japan

-(JP) Nikkei 225 opens -0.1% at 69,284.

-(JP) Bank of Japan (BOJ) raises target rate by 25bps to 1.00%; As expected; Reiterates to keep raising rates in response to economy, prices.

-(JP) Japan Econ Min Kiuchi to attend BOJ meeting today; Will not comment on dominant market view BOJ will raise rates today.

-(JP) Japan Fin Min Katayama: US hasn't offered official response on Mythos risks.

-(JP) Japan FTC probes ice cream makers over "price-fixing" - Nikkei.

-(JP) Japan Chief Cab Sec Kihara: Concerned about Israel's continued attacks on Southern Lebanon.

Korea

-(KR) Kospi opens +1.8% at 8,696.

-(KR) South Korea May Export Price Index M/M: 0.3% v 7.5% prior; Y/Y: 46.9% v 41.3% prior.

-(KR) South Korea Apr M2 Money Supply M/M: 0.6% v 0.4% prior.

Other Asia

-(IN) India raises export duty on diesel and jet fuel exports, leaving petrol duty unchanged - US financial press.

-(IN) India announces details of upcoming bond sale (held on Fridays); to sell combined INR320B iin 2029, 2033, 2055 and 2056 bonds on Jun 19th.

-(ID) 6.4 mag earthquake strikes Sulawesi, Indonesia - GFZ.

North America

-(US) Jun Empire Manufacturing: 5.7 v 13.5e; New Orders: 3.5 v 22.7 prior; Notes supply availability worsened to lowest since June 2022 [US market close].

-(US) May Industrial Production M/M: 0.1% v 0.3%e [US market close].

-(US) Jun NAHB Housing Market Index: 35 v 37e [US market close].

-(US) ANTHROPIC.IPO Follow up: Trump Officials met with Anthropic staff on Monday [15th June, 2026].

-(US) California's Edwards Air Force base reports 8 crew members reportedly dead in a B-52 bomber crash - CNN.

-(US) DAL Trump Administration closes probe into 2024 Delta Air Lines outage, that disrupted travel of more than 1.3M customers, without seeking penalties - USDOT.

-(US) California Gov Newsom: Files FOIA request seeking DOJ records on probe; Claims Trump ordered DOJ to investigate him and his wife.

-(CA) Canada May Annualized Housing Starts: 261.4K v 255.2Ke [US market close].

-(BR) IG4 is reportedly said to purchase Raizen debt to seek majority stake (>50%).

Europe

-(G7) France Pres Macron: Hormuz mission could be deployed within 2-3 days after US-Iran agreement is signed (expected on Fri, Jun 19th); Must be reopened without tolls [US market close].

-(EU) ECB’s Pereira (Portugal): Does not make sense to speculate on future ECB rates; Second-round effects haven’t materialized so far [US market close].

-(EU) Commission Pres Von der Leyen: Overcapacity increasingly dangerous for economy [US market close].

-(ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

Middle East

-(IR) Senior US Official: Confirms that Trump, VP Vance, and the Iranian Parlimentary speaker signed MOU; Details will be released in 24-48 hours; MOU contains possible $300B for Iran rebuild fund [US market close].

-(IR) US VP Vance: Iran deal will immediately reopen Strait and provides long term commitment Iran will not build a nuclear weapon - CNBC [US market close].

-(IR) Iran Foreign Ministry Spokesman Baghaei: Respecting sovereignty and territorial integrity of Lebanon is part of interim agreement with U.S. [US market close].

-(IR) Iranian Foreign Min: There probably will be a meeting between negotiating teams in Switzerland on Friday [US market close].

-(IR) VP Vance: Iran will never get a dime of US taxpayer money - comments on Fox News.

-(IR) Reportedly Tankers are carrying sanctioned oil from Iran and Russia are using digital tools to control crews and conceal traces, which could potentially leave ships vulnerable to bad actors seeking to cause an explosion or oil spill - WSJ.

-(IR) Iranian press: Sound of three explosions heard south of Qeshm Island in the Strait of Hormuz, possibly related to 'traffic management'.

-(IL) Israel May CPI M/M: -0.3% v -0.1%e; Y/Y: 1.9% v 2.2%e [US market close].

-(IL) Israel May Unemployment Rate: 2.8% v 3.0% prior [US market close].

Levels as of 01:20 ET

Nikkei 225 +0.5%; ASX 200 -0.1%; Hang Seng -1.5%; Shanghai Composite -0.1%; Kospi +2.1%.

Equity S&P500 Futures flat; Nasdaq100 -0.1%; DAX flat; FTSE100 flat.

EUR 1.1600-1.1576; JPY 160.37-160.05; AUD 0.7075-0.7046; NZD 0.5838-0.5795.

Gold +0.4% at $4,327/oz; BTC +0.3% at $65,945; Crude Oil -0.2% at $80.59/bbl; Copper -0.2% at $6.4788/lbs.