Citi‘s Most Read - Pan Asia

Research evidence excerpt

Citi‘s Most Read - Pan Asia

sectors and geographies. Policy will likely stay targeted against this backdrop. We

maintain our 4.7% growth forecast for 2026E, with 26Q2 likely the low point. The

July Politburo should signal piecemeal consumer support – not broad-based

stimulus, in our view. An outright deficit expansion is not our base case, but we

believe fiscal deployment is set to accelerate. While monetary policy is not in the

driver’s seat, we keep our call for a symbolic 10bps rate cut in 26H2E.

Xiangrong Yu | Xinyu Ji | Yuanliu Hu

Global Commodities - The worst is likely over for systematic curve carry

strategies

We expect commodities systematic curve carry strategies to continue to recover as

oil prices trend lower over the coming 6-12 months. A major de-escalation is our

new base case, and we view any temporary summer rally in oil prices as a rally to

fade and a potential entry opportunity for curve carry.

Kenny Hu, CFA | Maximilian J Layton | Anthony Yuen | Eric G Lee | Wenyu Yao

Japan FX - Why no second round of intervention as yet?

We look at the reasons the government has so far deferred a second round of

intervention to buy the JPY from the perspectives of 1) the IMF Exchange Rate

Classification, 2) Japan’s relationship with the US, 3) the economic policies of the

Takaichi government, and 4) the overall market environment. We continue to see

¥160/$–¥162/$ as the range in which further intervention is likely, with the

government likely to aim to push the USDJPY down to ¥155/$–¥157/$. However, in

order to maximize the medium-term effectiveness of intervention we believe the

rate needs to fall to below ¥155/$ and absorb long-term USD-buy hedging

demand at small and medium size enterprises (SMEs) more completely.

Osamu Takashima | Daniel Tobon | Brian Levine