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Daily Economic Update
16.06.2025China: Mixed data with strong retail sales but industrial production slightly weaker than expected. Retail sales in May rose above forecast by 6.4% (the highest growth since December 2023), accelerating from a 5.1% rise in April, helped by government subsidies and early sales promotions this May compared to last year. However, continued deflation (CPI -0.1% y/y in May, as previously reported) indicates that the recovery in household consumption remains fragile. Moreover, house prices quickened their monthly fall in May as new home prices dropped 0.2% m/m (the worst in seven months) and existing home prices declined 0.5%, the most in eight months. However, the y/y drop in new home prices softened for the seventh straight month, down 3.5% (-4% in April), the smallest fall since April 2024. The authorities have recently pledged further actions to contain the ongoing downturn in the property sector as previous measures haven’t been able to deliver a meaningful recovery. Meanwhile, uncertainties surrounding global trade and US tariffs weighed on industrial production as the annual growth slowed to 5.8% in May from 6.1% in April, coming slightly below forecasts.
Oil: Prices advance in Asian trading this morning as the Israel-Iran conflict intensifies. Brent futures opened higher this morning in Asian trading, extending gains from Friday’s significant rally, increasing by up to 5.5% at the outset before paring that advance to stand at around $75/bbl (+1% d/d) at the time of writing. For now, the impact on global crude oil supplies appears to be limited as Israel has only struck Iranian domestic fuel facilities, while the closure of the Strait of Hormuz remains a low-probability scenario. US President Trump’s comments that Iran and Israel could broker a ceasefire may have also weighed on the price advance today, although Iran has ruled out further negotiations until Israel ceases its attacks. Trading in safe havens such as gold, where prices similarly surged last week on news of the conflict, has been relatively muted this morning, down a marginal 0.1% on the day and indicating that, for now, the geopolitical risk premium has potentially been priced in for both the oil and other risk-off markets.
Global: Geo-political developments and Fed/BoE/BoJ policy meetings key matters this week. Geo-political developments related to the current Israel-Iran conflict, along with any updates on US tariff policies, will be important matters to monitor this week. In the US, the Fed’s FOMC will meet on Tuesday-Wednesday, and markets expect the Fed fund target range to be steady at 4.25-4.5%. The committee will also release its widely-followed dot-plot and new projections for GDP growth, inflation, and unemployment. In data releases, retail sales for May (due on Tuesday) are seen contracting 0.5% m/m following April’s modest gain of 0.1%. In the UK, the Bank of England will announce the results of its June MPC meeting on Thursday, and markets expect an unchanged policy rate of 4.25%. Meanwhile, CPI inflation for May will be released on Wednesday and consensus forecasts point to softer headline and core rates of 3.4% and 3.7% y/y versus April’s 3.5% and 3.8%, respectively. In Japan, the BoJ meets on Monday-Tuesday with expectations of rates remaining unchanged given the trade uncertainties and the upcoming upper house elections in July. Meanwhile, consumer price inflation for May is due on Friday with consensus expecting the core rate (excluding fresh food) to inch up to 3.6% y/y from 3.5% in April. Finally in China, the one-year and five-year loan prime rates are seen unchanged at 3% and 3.5% respectively, on Friday.
Saudi Arabia: Inflation edged down to 2.2% in May. Consumer price inflation edged down to 2.2% y/y in May from a near two-year high of 2.3% in March and April. The lower reading was mostly due to softer food and beverage inflation, which eased to 1.6% from 2.2% the previous month. In addition, inflation eased in restaurants and hotels (to 1.8% from 2.0%) and faster deflation was logged for furnishings and household equipment. Meanwhile, housing and utilities inflation was unchanged from April’s more than two-year low of 6.8%, with rents inflation edging down for the sixth consecutive month but to a still relatively high 8.0%. In contrast, higher inflation was recorded in miscellaneous goods and services (4.0% from 3.5%), and softer deflation was seen in transport (-0.8% from -1.0%) and communication (-1.4% from -1.5%). On a monthly basis, prices increased by a minimal 0.1%, the least since December 2024. recreation/sports (-7.5%).