Stocks mixed post-US CPI – Trade firmly in focus

Asia market update: Stocks mixed post-US CPI; Trade firmly in focus; US Crypto bill may pass tomorrow; Focus on US Jun PPI.

General trend

- Indonesia became the next country to get go-forward terms of trade with the US; To pay 19% duty on exports to the US with zero import tariffs on US imports. Indonesia later referred to the reduced rate (was 32% on Apr 2nd) as a "huge win" for its labor intensive sectors.

- Trump also commented that “India is working along the same lines as Indonesia”- Overall Trump said there 5 to 6 trade deals being worked on, likely 2 to 3 deals by Aug 1st. Smaller countries will likely have blanket tariffs of over ‘a little over 10%’.

- Trump also said the tariff timeline on chips will be similar to pharmaceuticals, but less complex.

- European pharma in focus after Pres Trump said he will initially have a ‘low’ tariff on pharmaceuticals imported into the US, ahead of the threatened 200% for non-US produced items in around 18 months from now.

- Nvidia CEO Huang confirmed Nvidia has Not yet received H20 chip export licenses, but thinks they will come "very fast", noting there are many orders already in.

- Hang Seng initially outperformed +0.6% to a three-year high, but then pared gains back to be flat, with Kospi and ASX underperforming -0.9% and -0.8% respectively.

- Long-end of the Japan yield curve down today (40 years lower -5bps, as USD/JPY rose to a more than 3-month high >149.

- Iron ore price >$100/ton, attributed to positive China sentiment by some analysts, while Aussie miner Rio Tinto confirmed strong China demand for raw materials balancing out tariff impacts, such as from their Canadian operations. [Affirms recent strong Industrial Production figures out of China].

- Japan/China relations may be tested with a China court finding an Astellas employee guilty of ‘spying’, having been detained since March 2023.

- Pres Trump sent out a social media post assuring that the House would pass the crypto-related GENIUS bill tomorrow (having failed an earlier attempt to pass in the House today, with some members upset that Trump's Exec Order banning a Central Bank Digital Currency [CBDC] in the US was not present in the bill).

- US equity FUTs -0.2% during Asian trading.

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

- 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 -0.8% at 8,559.

- China MOFCOM: Australia and China sign MOU on implementation and review of Free Trade Agreement (FTA ) - financial press.

- Australia sells A$800M v A$800M indicated in 4.25% Mar 2036 bonds, Avg Yield: 4.4476% v 4.3306% prior, bid to cover 4.00x v 2.58x prior.

- New Zealand Jun Non Resident Bond Holdings: 62.7% v 61.9% prior.

- Fonterra Global Dairy Trade Auction Dairy Trade price index: +1.1% v -4.1% prior.

China/Hong Kong

- Hang Seng opens +0.5% at 24,704; Shanghai Composite opens -0.1% at 3,502.

- Nvidia CEO Huang Has Not received H20 chip export licenses 'yet'; Not sure if they will come through, but I am sure they will come "very fast", there are many orders already in - comments at Shanghai Expo, Day 2.

- China Vice Premier He Lifeng: China is accelerating the construction of a modern industrial system.

- China MOF sets initial pricing for CNY6B in 2, 5 and 10 year offshore Yuan (CNY) denominated bonds.

- US House Panel asks the FBI to stop certifying 'China-linked' products; cites letter which criticizes 32 Chinese companies - US financial press.

- IDC: China Q2 Smartphone Shipments: -4.4% y/y; Apple China sales -1.3%, Huawel sales -3.4%.

- (US) Commerce Sec Lutnick: China chip sales were part of rare earth magnets agreements; US selling China our fourth-best chip - CNBC.

- China reportedly vows to strengthen regulation on live e-commerce industry - press.

- US Treasury Sec Bessent: Telling market participants not to worry on Aug 12th [China tariff deadline]; Not going to rush deals because of some market deadline.

- China Commerce Ministry (MOFCOM): Announces revisions to export control catalogue; Adds battery tech to export restrictions.

- China PBOC sets Yuan reference rate: 7.1526 v 7.1498 prior.

- China PBOC Open Market Operation (OMO): Injects CNY520B in 7-day reverse repos; Net injects CNY445B v injects CNY274B prior.

Japan

- Nikkei 225 opens +0.2% at 39,744.

- Astellas: Follow up: China Court finds Co employee guilty of spying - Japanese TV.

- Reportedly Japan's ruling LCP coalition risks losing majority - Nikkei.

- Japan PM Ishiba: Seeking tariff discussions on Fri (July 18th) with US Treasury Sec Bessent – Nikkei.

- Asia Ex-Japan dollar bond subscription ratio rises further in June - financial press.

- US Treasury Sec Bessent: Going to Japan more for World Expo than for trade talks.

Korea

- Kospi opens -0.2% 3,207- South Korea Jun Export Price Index M/M: -1.1% v -3.4% prior; Y/Y: -4.5% v -2.4% prior.

- South Korea Jun Unemployment Rate: 2.6% v 2.7%e.

- KB Securities: South Korea government might issue KRW235T in government bonds in 2026 v KRW228.2T y/y; budget announcement is expected at the end of Aug - US financial press.

- US said to be pressing South Korea to set up a multi-billion dollar industry fund - Korea press.

Other Asia

- (VN) Follow up: Vietnam PM: Targeting 2025 GDP growth target of at 8.3-8.5% this year.

- Taiwan Dep Trade Representative Yen: Affirms goal to reach tariff deal with the US before the Aug 1 deadline.

- (ID) Follow up: Indonesia: US 19% tariff a 'huge win' for labor intensive sectors - financial press.

- (ID) US Pres Trump: Confirms 19% duty on Indonesian exports to US with zero import tariffs on US goods to Indonesia (prior Apr 2nd rate 32%); India is working along the same lines as Indonesia; We have a couple of deals that will be announced.

- Indonesia says some products to enter the EU with no tariffs due to CEPA - financial press.

- (SG) Monetary Authority of Singapore (MAS) reports (SGD) FY24/25 Net 19.7B.

North America

- US Pres Trump: The tariff timeline on chips will be similar to pharmaceuticals, but less complex.

- (US) Bill to codify DOGE cuts clears Senate procedural hurdle - financial press.

- (US) Pres Trump: I am in the Oval Office with 11 of the 12 Congressmen/women necessary to pass the GENIUS Act and they have agreed to vote in favor of the bill - post on Truth Social.

- (US) Commerce Sec Lutnick: We got lots of deals on the table; Trump's factory plans to add 1% GDP growth in one year - Fox News Interview.

- Fed's Logan (non-voter): Base case calls for continued restrictive policy; If possible softer labor market could require cuts soon; If Fed misjudges and does not cut rates soon enough, it could cut rates further to get employment back on track.

- (US) President Trump is reportedly set to sign an Executive Order (EO) that would open 401(k) retirement plans to private market investments; The EO is expected within days - WSJ.

- US Pres Trump: Pharma tariffs will begin probably at the end of July; Initial tariffs on pharmaceuticals will be low.

- US Pres Trump: Working on 5 to 6 trade deals; There will be probably 2 to 3 deals by Aug 1st; Will veer from trade letters 'On occasion;' We have a Vietnam deal, that deal is well set; Will be releasing trade letters soon on smaller countries, which will likely have blanket tariffs of over 10%.

- US Pres Trump: Fed Chair Powell's renovations 'sort of is' a fireable offense; Bessent is an option for Fed Chair, but likes the job he's doing as Treasury Sec.

- (US) Treasury Sec Bessent: Need to focus on inflation trends; I have access to CPI number but have not looked at it because coming on TV today; Expect to meet China counterparts in a few weeks; We're in a good place on China now - TV interview.

- (ID) US Pres Trump: Great deal, for everybody, just made with Indonesia - Truth Social post.

- (US) Pres Trump admin said preparing to releases AI action plan this month in speech - press.

- (US) July empire Manufacturing: +5.5 V -9.2E (above all estimates); Input prices increases picked up; Business activity picked up slightly in New York State in July, representing the first increase in several months.

- (US) JUN CPI M/M: 0.3% V 0.3%E; Y/Y: 2.7% V 2.6%E (2nd straight re-acceleration in annual pace and highest since Feb); CPI (ex-food/energy) M/M: 0.2% v 0.3%e; Y/Y: 2.9% v 2.9%e.

- (CA) CANADA JUN CPI M/M: 0.1% V 0.1%E; Y/Y: 1.9% V 1.9%E.

- (US) US Pres Trump: Consumer Prices LOW. Bring down the Fed Rate, NOW!!!; Fed should cut Rates by 3 Points. Very Low Inflation. One Trillion Dollars a year would be saved!!! - Truth Social.

- (US) Energy Sec Wright: Pres Trump is not planning a tariff carve-out for energy; We want to see businesses and consumers direct capital - CNBC.

- (CA) Canada PM Carney: Canada is close to tariff- free trade, but there are issues; There's little evidence that any country will escape US tariffs - comments to media.

- (US) Fed’s Barkin (non-voter for 2025): More price pressures are coming from tariffs; Price pressures won't be as significant as in 2022 - speech text.

- (US) Fed's Collins (voter): Time for Fed to be 'actively patient' with monetary policy; Economy continues to be in a good place overall; See core inflation around 3% by year end - speech text.

- (US) Fed Discount Minutes: Many directors observed that consumers and businesses remained cautious about their spending and future plans in light of this uncertainty. Several directors noted a range of plans for price adjustments across industries (update).

Europe

- IATA Dir General Walsh: Impact of geopolitical issues on airlines greater than I have ever seen before; Airlines may be reluctant to take delivery of aircraft due to tariff uncertainty, and associated cost impact - financial press.

- (EU) EU spokesperson: Trade Commissioner Sefcovic said to talk with US Trade Rep Greer early Tuesday's evening; EU has No intention to move forward with any counter-measures before Aug 1st.

- (DE) Germany Chancellor Merz: Goal on tariff dispute is quick resolution; In close contact with US Pres Trump and EC Pres Von Der Leyen; EU refraining from countermeasures for now, but US should not underestimate EU willingness to respond.

- (EU) EU spokesperson: Trade Commissioner Sefcovic said to talk with US Trade Rep Greer early Tuesday's evening; EU has No intention to move forward with any counter-measures before Aug 1st.

- (IT) Italy PM Meloni: A deal on tariffs between EU and US must be reached before Aug 1st; Working to avoid a tariff war with US.

- (UK) BOE's Mann (hawkish dissenter): Inflation is down quite a bit, but still a challenge.

- (IL) Israel Jun CPI M/M: 0.3% v 0.2%e; Y/Y: 3.3% v 3.1%e.

Levels as of 01:20 ET

- Nikkei 225 +0.2%, ASX 200 -0.8%, Hang Seng flat; Shanghai Composite -0.2%; Kospi -0.9%.

- Equity S&P500 Futures -0.2%; Nasdaq100 -0.2%; DAX -0.4%; FTSE100 +0.1%.

- EUR 1.1597-1.1620; JPY 148.72-149.18; AUD 0.6512-0.6535; NZD 0.5943-5967.

- Gold +0.3% at $3,345/oz; Crude Oil +0.6% at $66.91/bbl; Copper +0.1% at $5.5210/lb.