Asia Economics & Strategy Daily: EM Strategy Weekly; SG Jun CPI; CN Politburo Preview; KR GDP & Jul CPI Preview; BI Pauses

Research evidence excerpt

Asia Economics & Strategy Daily: EM Strategy Weekly; SG Jun CPI; CN Politburo Preview; KR GDP & Jul CPI Preview; BI Pauses

Markets Strategy Weekly - There is only one game in

town

Singapore: Jun core CPI was again lower than expected at 1.6% YoY (May/Apr:

1.4%), but both core goods and core services inflation picked up (especially food

and holiday-related expenses and furniture), with momentum and pervasiveness

rising. We see 2026 core averaging 1.9% (2027F: 2%), staying above 2% from Jul-26

until Jun-27. Importantly, MAS/MTI’s outlook still sees inflation risks tilted to the

upside on lagged pass-through of energy costs to a “wider” range of items “over

time.” While downside surprises in 2Q26 core may call for a hold in Jul (30%), this

could be outweighed by resurgent oil prices, persistently >2% YoY core inflation,

unexpected widening of the positive output gap, and higher inflation expectations

amid accelerating food prices. We reiterate our non-consensus call for MAS to

steepen 50bps in Jul (70% probability), failing which Oct, with MAS unlikely to

close the door to further tightening. Singapore Economics - Reiterating Our Non-

Consensus Jul Steepening Call Despite Gentler Rise in Jun Core

China: The July Politburo meeting (held on the 30th in 2025) is a key forum for mid-

year policy recalibration, set against a backdrop of AI-driven market volatility and a

26Q2 GDP miss. We continue to expect measured support: stronger rhetoric on

domestic demand, accelerated fiscal deployment in 26H2, and continued

emphasis on utilizing existing policies. On consumption, the focus is likely on

supply-side measures for services, with direct demand-side stimulus largely

absent, in our view. Capital markets are set to receive renewed policy attention

amid recent market volatility.