Weekly Outlook - United Overseas Bank
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Friday, 12 June 2020
Alvin Liew Lee Sue Ann Peter Chia
Alvin.LiewTS@uobgroup.com
ee.SueAnnobgroup.com
Global Economics & Markets Research
Email: GlobalEcoMktResearch@uobgroup.com
URL: www.uob.com.sg/research
Weekly Outlook
15 – 19 June 2020
SINGAPORE
Data Focus On NODX While Trade Minister Chan Delivers His Speech On 14 June
1) The key data will be the May non-oil domestic exports on Wednesday (17 Jun) and Bloomberg median estimate is pointing to a
5.9% m/m contraction (similar to -5.8% in Apr). Despite the sequential decline, this will still translate into a y/y gain, albeit
smaller at 3.3% after a 9.7% y/y jump in in Apr. MTI Minister Chan Chun Sing’s televised speech will be on Sunday, 14 Jun.
2) We will be releasing the UOB 3Q 2020 Quarterly Global Outlook report on 18/19 June.
KEY ASIA-PACIFIC ECONOMIES
Various Chinese Monthly Indicators On Tap, 1Q GDP From New Zealand, BI and CBC Decisions
1) At the start of the week, the key Asian data will very much revolve around the remaining monthly May Chinese data on Monday
(15 Jun) which could give insights on how the Chinese economy is recovering from COVID-19;
a. May industrial production (Bloomberg Est +5% y/y from +3.9% in Apr)
b. May retail sales (Bloomberg Est -2% y/y from -7.5% in Apr)
c. May fixed assets investment (Bloomberg Est -6% y/y from -10.3% in Apr)
d. May surveyed jobless rate (Bloomberg Est 5.9% from 6% in Apr)
e. May new home price (from 0.42% m/m in Apr)
2) 1Q 2020 GDP from New Zealand (18 Jun, Bloomberg Est +0.3% y/y, -1.1% m/m, from +1.8% y/y, +0.5% m/m in 4Q 2019).
3) Australia 1Q home price index (16 Jun, Bloomberg Est +7.7% y/y, from +2.5% in 4Q 2019) and May employment report which
may show a further job decline of 76,900 (from 594,300 in April) while the unemployment may pick up further to 6.8% (from
6.2% in Apr). The Reserve Bank of Australia will release the RBA Minutes of June Policy Meeting on Tuesday (16 Jun).
4) May trade data from Indonesia (15 Jun, Bloomberg Est Exports -18.72% y/y from -7.02% in Apr, Imports -24.55% y/y from -
18.58% in Apr)
5) Attention will be on Asian monetary policy decisions this Thursday (18 Jun) as we will have the central banks of Indonesia (BI,
no scheduled time) and Taiwan (CBC, 4pm SGT). We expect CBC to keep their policy rate unchanged at 1.125%. While
further rate cuts are not ruled out as current deflation provides them with the room to cut rates further, we think further easing
is looking less certain at this point given the official forecast for a strong rebound in 2H growth to around 2.3% y/y from around
1.0% projected for 1H. As for BI, we expect the central bank to remain accommodative while deploying other easing measures
to support the economy. Our view is for BI to cut another 25bps in 3Q20 to 4.25%. According to the latest Bloomberg polls (12
Jun), all the 5 analysts polled expect a 25 bps cut to 4.25% in June. Please see our Central Bank Watch.
US AND DEVELOPED ECONOMIES
Powell’s Senate Testimony, G7 Data, G10 Policy Decisions From BOJ, SNB, Norges Bank & BOE, The 2nd Wave
1) Post-June FOMC, attention will still stay on the Federal Reserve as FOMC Chair Jerome Powell is scheduled to testify before
the US Senate Bank panel on Tuesday (16 Jun, 10pm SGT). During the week, we will also have several FOMC voters
speaking in public forums, including Kaplan (15 Jun), Mester (17 and 18 Jun). And at the end of the week, Powell will join
Mester at a community event (19 Jun).
2) Major G10 central bank policy decisions will be closely watched this week:
a. 15/16 Jun 2020 Bank of Japan, BOJ MPM (due on 16 Jun, likely between 11am and 2pm SGT) – While we have long
held the view that the BOJ will resume its monetary easing in 2020 (which it did during the height of the COVID-19
pandemic), we expect the BOJ to keep policy unchanged in this June MPM as the government announced more fiscal
stimulus.
b. 18 Jun 2020 Bank of England, BOE MPM (7:00pm SGT) – We think the Bank Rate will remain at 0.10% in this meeting
and for some time. As for QE, given the additional borrowing planned by the Debt Management Office (DMO), the BOE will
likely boost purchases. This is also what Jonathan Haskel and Michael Saunders, who both voted in May for boosting QE
suggested. As such, this meeting is clearly live, and the BOE is likely to boost its QE program by GBP100bn to GBP745bn.
c. 18 Jun Swiss National Bank, SNB (3:30pm SGT) – Expected to keep both policy and deposit rate unchanged at -0.75%.
d. 18 Jun Norway’s Norges Bank (4pm SGT) – Expected to keep its policy rate unchanged at 0.00%.
3) A substantial G7 data calendar, dominated by US & UK which is mostly expected to improve except for Japan’s May trade:
o US Empire manufacturing survey (15 Jun, Bloomberg Est -27.5 from -48.5 in May)
o UK ILO April unemployment rate (16 Jun, Bloomberg Est 4.5% from 3.9% in March)
o US May retail sales (16 Jun, Bloomberg Est +7.4% m/m from -16.4% in April)
o US May industrial production (16 Jun, Bloomberg Est +3.0% m/m from -11.2% in April)
Weekly Outlook
Friday, 12 June 2020
1|P a g eo Japan May trade (17 Jun, Bloomberg Est Exports -28.3% y/y from -21.9% in Apr), Imports -23.4% y/y from -7.2% in Apr)
o UK May CPI (17 Jun, Bloomberg Est +0.6% y/y from +0.8% in Apr)
o US May housing starts (17 Jun, Bloomberg Est +23.5% m/m from -30.2% in Apr) & building permits (17 Jun,
Bloomberg Est +18.2% m/m from -21.4% in Apr)
o US Initial jobless claims (18 Jun). We still expect the number to ease but still be well above 1 million and above historical
average (from the 1.55 million claims reported on 11 Jun).
o May Leading Index (18 Jun, Bloomberg Est +2.4% from -4.4% in Apr)
o Philadelphia Fed Business Outlook for June (18 Jun, Bloomberg Est -27.4 from -43.1 in May)
o Japan May CPI (19 Jun, Bloomberg Est +0.2% y/y from +0.1% in Apr)
o UK May retail sales include auto fuel (19 Jun, Bloomberg Est+5.0% m/m, -18.4% y/y from -18.1% m/m, -22.6%y/y in Apr)
nd
4) US COVID-19 Watch: Beware of the 2 Wave as infection cases topped 2 million in US while many states like Texas,
Arizona, Florida, North Carolina, are experiencing rising COVID-19 infection increasing ICU utilization, even as the states
are undertaking plans to reopen their economies, and resisting any suggestion of reversing their re-openings or returning
to lockdown. US Treasury Secretary Mnuchin insisted (11 Jun) the US cannot let the COVID-19 shut down its economy
again, adding that more than $1tn in rescue funds will flow into the economy over July and he was prepared to go back to
Congress for more money to support the economy.
ASIA WEEKLY RECAP
Economy Data/Event UOB’s View/Comment
China Price Indicators Both China’s Consumer Price Index (CPI) and Producer Price Index (PPI) continued to ease
Continue To Trend and were below consensus forecasts in May. This provides more room for monetary easing
Lower while PPI deflation pointed to the need for the government to continue with its counter-cyclical
measures. Full Report here.
Indonesia Foreign Reserves Indonesia foreign exchange reserves increased by USD2.6bn to USD130.5bn in May 2020,
Rose Further In May continuing the upswing from the previous month at USD127.9bn. Full Report here.
Malaysia Short-Term Recovery PM Tan Sri Muhiyiddin Yassin announced a MYR35bn (US$8bn) short-term economic
Plan Announced recovery plan on 5 June, in addition to the PRIHATIN economic stimulus package announced
Worth MYR35bn in March and April worth MYR260bn. This brings the total fiscal package to ~MYR 295bn
(~US$70bn) or 20% of GDP. The recovery plan covers some critical areas to save and create
(USD$8bn)
jobs, addresses SME funding and cash flow problems, assisting digital adoption, encouraging
businesses to adhere to safety related measures, social protection for gig workers, tourism
support, encouraging flexible work arrangements, property incentives, spending initiatives, tax
incentives for foreign investments, and commodity sector support. Full Report here.
Philippines April Exports Slump A record pullback in both imports and exports shrank the Philippines’ trade gap to the lowest in
50.8% y/y more than five years in April amid the shutdown of economies to stem the spread of COVID-
19. Exports fell 50.8% y/y while imports declined 65.3% y/y leaving the trade deficit at
US$499m in April. This marks the smallest gap recorded since the US$257.18m posted in
March 2015. Key exports that fell were electronics (-48.6%) and manufactures (-55.9%).
Singapore A Series Of In a series of ministerial speeches starting with Prime Minister Lee Hsien Loong (7 Jun) who
Ministerial Speeches commented that Singapore’s growth is expected to contract between 4-7% in 2020 due to the
In June COVID-19 pandemic. He added that unemployment and retrenchment will increase this year,
while jobs lost may not return. Nonetheless, Singapore has had a head-start in developing
plans for a future economy before COVID-19. In a separate announcement, MND Minister
Lawrence Wong added that Singapore must prepare for more COVID-19 cases as restrictions
ease, and social restrictions may be reintroduced if infection spikes.
Thailand More Stimulus May World Bank downgraded Thailand’s growth outlook further to 5.0% in 2020, down from 2.7%.
Be On The Cards As The agency added that "factory closures and the disruption of the production of intermediate
Growth Sees Further inputs have had a negative impact on supply chains in Cambodia, Malaysia, Myanmar and
Thailand." The Finance Minister Apisak Tantivorawong commented that more stimulus have
Headwinds
been planned in 3Q20 to spur domestic consumption and tourism, adding to the three-part
fiscal plan (15% of GDP) that was already previously announced in early 2020.
Vietnam EU-Vietnam deals a Vietnam's National Assembly (NA) on Monday (8 Jun) ratified the EU-Vietnam Free Trade
key growth catalyst Agreement (EVFTA), to be effective in 30 days. The deal was signed in Hanoi in June 2019,
post-COVID and was ratified by the European Parliament in February 2020. The same sitting of NA also
endorsed the EU-Vietnam Investment Protection Agreement (EVIPA). Under the EVFTA, the
EU will lift 85% of its tariffs on Vietnamese goods, gradually cutting the rest over the next 7
years. Vietnam will lift 49% of its import duties on EU products and phase out the rest over 10
years. A pre-Covid-19 study from Vietnam’s Ministry of Planning and Investment estimated
that both agreements would expand Vietnam’s GDP by an additional 4.6% and boost exports
to the EU by 42.7% by 2025 with tariff-free access and relocation of supply chains. Meanwhile,
the European Commission had estimated the bloc’s GDP would add US$29.5 billion by 2035,
along with additional 29% increase of exports to Vietnam.
Weekly Outlook
Friday, 12 June 2020
2|P a g eKEY DATA/EVENTS: ASIA & OCEANIA
Date Data/Event Mth Prior Date Data/Event Mth Prior
12 Jun Philippines celebrates 17 Jun NZ Current Account GDP Ratio YTD 1Q -3.00%
PH
Independence Day
NZ BoP Current Account Balance NZD 1Q -2.657b
NZ Food Prices MoM May 1.00%
AU Westpac Leading Index MoM May -1.50%
IN CPI YoY May 5.84%
SI Non-oil Domestic Exports SA MoM May -5.80%
IN Industrial Production YoY Apr -16.70%
SI Non-oil Domestic Exports YoY May 9.70%
IN Consumer Confidence Index May 84.8
SI Electronic Exports YoY May -0.60%
CH Foreign Direct Investment YoY CNY May 11.80%
NZ Non Resident Bond Holdings May 51.30%
15 Jun NZ REINZ House Sales YoY May -78.50%
HK Composite Interest Rate May 0.90%
NZ Performance Services Index May 25.9
18 Jun NZ GDP SA QoQ 1Q 0.50%
NZ Net Migration SA Apr 9700
NZ GDP YoY 1Q 1.80%
CH New Home Prices MoM May 0.42%
CH Swift Global Payments CNY May 1.66%
CH Industrial Production YoY May 3.90%
AU Reserve Bank of Australia Bulletin
CH Industrial Production YTD YoY May -4.90%
AU Employment Change May -594.3k
CH Retail Sales YoY May -7.50%
AU Unemployment Rate May 6.20%
CH Retail Sales YTD YoY May -16.20%
AU Participation Rate May 63.50%
CH Property Investment YTD YoY May -3.30%
AU Full Time Employment Change May -220.5k
CH Fixed Assets Ex Rural YTD YoY May -10.30%
AU Part Time Employment Change May -373.8k
CH Surveyed Jobless Rate May 6.00%
A$1026
ID Trade Balance May -$345m AU RBA FX Transactions Market May
m
ID Exports YoY May -7.02% ID Bank Indonesia 7D Reverse Repo Jun-18 4.50%
ID Imports YoY May -18.58% TW CBC Benchmark Interest Rate Jun-18 1.13%
IN Wholesale Prices YoY May -- MU Visitor Arrivals May 11t
- 19 Jun ABS Australia Preliminary May Retail
AU
IN Trade Balance May $6760.0 Sales
m TH Foreign Reserves Jun-12 --
IN Exports YoY May -60.30%
TH Forward Contracts Jun-12 --
IN Imports YoY May -58.70%
PH BoP Overall May $1666m
16 Jun NZ Westpac Consumer Confidence 2Q 104.2 CH FX Net Settlement - Clients CNY May 84.9b
RBA Minutes of Jun. Policy TW Export Orders YoY May 2.30%
AU
Meeting
AU House Price Index YoY 1Q 2.50%
AU House Price Index QoQ 1Q 3.90%
Weekly Payroll Jobs and Wages in
AU
Australia (for May 30)
HK Unemployment Rate SA May 5.20%
Weekly Outlook
Friday, 12 June 2020
3|P a g eKEY DATA/EVENTS: US AND DEVELOPED ECONOMIES
Date Data/Event Mth Prior Date Data/Event Mth Prior
12 Jun BOJ Outright Bond Purchase 1~3, 17 Jun BOJ Outright Bond Purchase 1-3,
JN JN
3-5 Years 5~10, 25 Years
RU Russia celebrates Day of Russia UK CPI YoY (MoM=-0.2%) May 0.80%
JN Capacity Utilization MoM Apr -3.60% UK CPI Core YoY May 1.40%
JN Ind. Production MoM (YoY=-14.4%) Apr F -9.10% UK RPI YoY (MoM=1.5%) May 1.50%
UK Ind. Production MoM (YoY=-8.2%) Apr -4.20% UK PPI Input NSA YoY(MoM=-5.1%) May -9.80%
UK Mfg Production MoM (YoY=-9.7%) Apr -4.60% UK PPI Output NSA YoY (MoM=-0.7%) May -0.70%
Ind. Production SA MoM (YoY=- PPI Output Core NSA YoY (MoM=-
EZ Apr -11.30% UK May 0.60%
12.9%) 0.1%)
Import Price Index MoM (YoY=- Industrial Sales WDA YoY (MoM=- -
US May -2.60% IT Apr
6.8%) 25.8%) 25.20%
Export Price Index MoM (YoY=- Industrial Orders NSA YoY (MoM=- -
US May -3.30% IT Apr
7.0%) 26.5%) 26.60%
US U. of Mich. Sentiment Jun P 72.3 -
EZ Construction Output MoM Apr
14.10%
US U. of Mich. 5-10 Yr Inflation Jun P 2.70% -
EZ Construction O/P YoY (MoM=-14.1%) Apr
US Household Change in Net Worth 1Q $3148b 15.40%
15 Jun UK Rightmove House Prices YoY Jun -- EZ CPI YoY (MoM=-0.1%) May F 0.30%
JN Tertiary Industry Index MoM Apr -4.20% EZ CPI Core YoY May F 0.90%
IT CPI EU Harmonized YoY May F -0.20% US MBA Mortgage Applications Jun-12 9.30%
IT General Government Debt Apr 2431.1b US Building Permits- (MoM=-20.8%) May 1074k
EZ Trade Balance SA Apr 23.5b -
US Building Permits MoM May
20.80%
CA Manufacturing Sales MoM Apr -9.20%
CA Teranet/National Bank HPI YoY May 5.30%
US Empire Manufacturing Jun -48.5
US Housing Starts (MoM=-30.2%) May 891k
CA Existing Home Sales MoM May -56.80%
CA CPI NSA MoM May -0.70%
Fed’s Kaplan Speaks to the
US CA CPI YoY May -0.20%
Money Marketeers
Fed's Mester Speaks on the Fed's
US Net Long-term TIC Flows Apr -$112.6b US
Response to Covid-19
18 Jun -
US Total Net TIC Flows Apr $349.9b JN Tokyo Condominiums for Sale YoY May
51.70%
16 Jun Powell Delivers Semi-Annual SZ SNB Sight Deposit Interest Rate Jun-18 -0.75%
US
Policy Report to Senate Panel
JN BOJ Policy Balance Rate Jun-16 -0.10% SZ SNB Policy Rate Jun-18 -0.75%
NO Norges Bank deposit rate 0.00%
JN BOJ 10-Yr Yield Target Jun-16 0.00%
EZ ECB Publishes Economic Bulletin
UK Claimant Count Rate May 5.80%
IT Trade Balance Total Apr 5685m
UK Jobless Claims Change May 856.5k
UK Bank of England Bank Rate Jun-18 0.10%
UK Average Weekly Earnings 3M/YoY Apr 2.40%
BOE Asset Purchase Program
UK ILO Unemployment Rate 3Mths Apr 3.90% UK Jun-18 645b
Total
UK Employment Change 3M/3M Apr 210k CA Wholesale Trade Sales MoM Apr -2.20%
CPI EU Harmonized MoM US Philadelphia Fed Business Outlook Jun -43.1
GE May F 0.00%
(YoY=0.5%)
US Initial Jobless Claims Jun-13 1542k
GE CPI MoM (YoY=0.6%) May F -0.10%
US Continuing Claims Jun-06 20929k
EZ Labour Costs YoY 1Q 2.40%
US Leading Index May -4.40%
GE ZEW Survey Expectations Jun 51
Fed's Mester Speaks to Global
GE ZEW Survey Current Situation Jun -93.5 US
Interdependence Center
EZ ZEW Survey Expectations Jun 46 19 Jun JN Natl CPI YoY May 0.10%
CA Int'l Securities Transactions Apr -9.78b JN Natl CPI Ex Fresh Food YoY May -0.20%
US Retail Sales Advance MoM May -16.40% JN BOJ Minutes of April Meeting
US Industrial Production MoM May -11.20% Retail Sales Inc Auto Fuel MoM -
UK May
(YoY=-22.6%) 18.10%
US Capacity Utilization May 64.90%
UK Public Finances (PSNCR) May 89.5b
US Manufacturing (SIC) Production May -13.70%
UK Public Sector Net Borrowing May 61.4b
US Business Inventories Apr -0.20%
GE PPI YoY (MoM=-0.7%) May -1.90%
US NAHB Housing Market Index Jun 37
EZ ECB Current Account SA Apr 27.4b
17 Jun JN Trade Balance May -¥930.4b
RU Key Rate Jun-19 5.50%
JN Trade Balance Adjusted May -¥996.3b -
JN Exports YoY May -21.90% US Current Account Balance 1Q $109.8
b
JN Imports YoY May -7.20%
-
CA Retail Sales MoM Apr
10.00%
Fed’s Rosengren Discusses
US
Economic Outlook
UK CBI Trends Total Orders Jun -62
UK CBI Trends Selling Prices Jun -20
Fed Chair Powell Joins Mester for
US
Youngstown Community Event
Weekly Outlook
Friday, 12 June 2020
4|P a g eDisclaimer This publication is strictly for informational purposes only and shall not be transmitted, disclosed, copied or relied upon by any person for whatever purpose, and is also not intended for distribution to, or use by, any person in any country where such distribution or use would be contrary to its laws or regulations. This publication is not an offer, recommendation, solicitation or advice to buy or sell any investment product/securities/instruments. Nothing in this publication constitutes accounting, legal, regulatory, tax, financial or other advice. Please consult your own professional advisors about the suitability of any investment product/securities/ instruments for your investment objectives, financial situation and particular needs. The information contained in this publication is based on certain assumptions and analysis of publicly available information and reflects prevailing conditions as of the date of the publication. Any opinions, projections and other forward-looking statements regarding future events or performance of, including but not limited to, countries, markets or companies are not necessarily indicative of, and may differ from actual events or results. The views expressed within this publication are solely those of the author’s and are independent of the actual trading positions of United Overseas Bank Limited, its subsidiaries, affiliates, directors, officers and employees (“UOB Group”). Views expressed reflect the author’s judgment as at the date of this publication and are subject to change. UOB Group may have positions or other interests in, and may effect transactions in the securities/instruments mentioned in the publication. UOB Group may have also issued other reports, publications or documents expressing views which are different from those stated in this publication. Although every reasonable care has been taken to ensure the accuracy, completeness and objectivity of the information contained in this publication, UOB Group makes no representation or warranty, whether express or implied, as to its accuracy, completeness and objectivity and accept no responsibility or liability relating to any losses or damages howsoever suffered by any person arising from any reliance on the views expressed or information in this publication. Weekly Outlook Friday, 12 June 2020 5|P a g e
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