Key Highlights

• Senate continues “vote-a-rama” as it struggles to pass Trump’s $3.3tn tax and spending bill; eight GOP holdouts leave the leadership with only three votes to spare.

• EU open to a 10% universal tariff deal with the U.S., seeks exemptions on autos, steel and aluminum ahead of July 9 deadline to avoid a 50% tariff hike on most exports.

• Japan digs in on rice in trade talks, while India rushes to seal interim deal.

• Thai court suspends PM from duty pending case on her dismissal and ongoing protests. 

Chart of the Day

EXHIBIT #1: LIMITED HEDGING SEEN AS JAPANESE EQUITIES OUTPERFORM

^{Source: BNY}

Using the excess equities flow figures and the outright fixed income numbers, we can assess hedging needs based on realized flows rather than looking at asset returns. We find that this process is much more dynamic, and some of the strongest-performing markets by realized flow have already seen some degree of self-hedging throughout the quarter. For example, based on excess equity flow strength over the past month, we find that Japan remains the best-performing equity market despite a poor performance last week. Charting flows through the quarter, we see that the first round of strong FX flows was almost perfectly negatively aligned with equity flows. As investors exited the Japanese market due to fears over exposure to U.S. tariffs, FX performance was firm as hedges were unwound. May was an indifferent month for assets, but FX outflows started to come through again. We suspect that hedging of JGBs may have played a role, but more broadly this was a period of recovery for risk appetite so outright JPY sales for carry trades also likely contributed. More recently, JPY has been bought as the dollar continues to struggle, but equity flows have also been strong. Consequently, there is no sign of a pickup in hedging interest for Japanese equities on a marginal or outright basis, given both are positively aligned. Most notably, by this measure Japan is the outlier in G10 hedging.

What's Changed?

The new quarter brings mixed risk sentiment with divergent stock performance globally, even as the U.S. market sets new record highs. Bond markets are bid with lower yields amid mostly weaker PMI reports in Asia and mixed EMEA results. Global trade data from South Korea and Indonesia showed higher exports, while prices in Indonesia rose, as did those in the Eurozone. Higher CPI and lower growth are setting Q3 up to wait and see whether stagflation risks hit the U.S. markets. The one standout in the deluge of new economic data today is Japan, where the Tankan was better, consumer confidence was better, manufacturing PMI was better and inflation expectations were above the BoJ’s target. JPY therefore led the G10 FX markets, gaining over 0.6%. The focus on Europe remains with the ECB, where Lagarde sounded less worried about EUR strength than the markets, with a 1.18 breakout today opening up option-related pressures ahead. BoE Governor Bailey’s comments add to a dovish outlook there, with less quantitative tightening ahead and gilts keeping pace with the 5-6bp drop in EMEA 10y bond yields. All of this sets the U.S. markets up for another key session; yields are leading, with 10y below 4.20% and 2y dancing at 3.70%. USD is notably weaker, and U.S. stock futures continue to climb higher. The risk of any reversal in trend rests on the heavy economic data, from ISM manufacturing to JOLTS to more from FOMC Chair Powell in Sintra. How markets absorb this information and then analyze it is not as important as the price action that follows, with momentum and carry factors winning in most markets. 

What You Need to Know

In her opening remarks at the ECB Sintra Forum, President Christine Lagarde outlined key lessons from the ECB’s 2025 strategy assessment. She emphasized that growing economic uncertainty is increasing inflation volatility, driven by more frequent supply shocks and structural changes in firm pricing behavior. In response, the ECB will place greater emphasis on risk scenarios alongside baseline forecasts to better capture uncertainty. The reaction function has evolved into a more symmetric stance, requiring forceful or persistent action against both inflationary and disinflationary shocks. Lagarde also highlighted the shift from aggressive rate hikes to policy persistence as inflation decreases, aiming to balance price stability with economic resilience. The ECB’s updated framework reinforces its 2% symmetric inflation target and medium-term focus, while acknowledging the need for flexibility in navigating unpredictable global dynamics. Euro Stoxx 50 -0.182% to 5293.6, EURUSD -0.009% to 1.1786, BBG AGG Euro Government High Grade EUR -283.5bp to 0%.

The HCOB Eurozone Manufacturing PMI rose slightly to 49.5 in June 2025, from 49.4 in May, marking its highest level in 34 months, although it remains below the 50.0 threshold. Output growth slowed (PMI output index at 50.8), while new orders stabilized after 37 consecutive months of decline. Export sales also held steady, ending a long downturn. Despite the improved demand environment, employment and input purchases continued to fall. Business confidence reached its highest level since February 2022, but cost-cutting and inventory streamlining persisted. Input costs and output prices both fell modestly, while supplier delivery times lengthened for the first time since January.

In comments made at Sintra, Bank of England Governor Andrew Bailey highlighted signs of U.K. labor market softening and suggested the path of interest rates is now “gradually downwards.” While noting persistent uncertainty in economic activity rather than inflation, he stressed the need to monitor inflation persistence closely. Bailey emphasized the importance of stable, sustained growth and said the chancellor remains committed to a robust fiscal framework. He also flagged that businesses are delaying investment amid uncertainty, and that major structural changes are needed to boost productivity. The pace of bond sales and potential yield curve steepening under quantitative tightening (QT) remain active considerations. FTSE 100 -0.024% to 8758.9, GBPUSD +0.212% to 1.3761, 10y gilt -4.6bp to 4.443%.

Japan’s Q2 2025 Tankan survey showed large manufacturers’ sentiment steady at +13, while non-manufacturers held at +34, with business conditions stabilizing across enterprise sizes. Inflation pressures eased: input and output price DIs declined for both manufacturing and non-manufacturing sectors. Capital investment plans weakened for large manufacturers (FY2025: -5.1% y/y), though non-manufacturers maintained growth (+1.2%). Employment conditions remained tight, with all enterprise categories reporting insufficient labor. Sales and profit outlooks improved marginally, but large firms still expect negative net income growth for FY2025. Overseas business sentiment remained cautious, with FY2025 consolidated profits projected to fall 4.9%. Inflation expectations for general prices remained anchored at 2.1% over 1-5 years.

Thailand’s constitutional court has accepted a petition questioning Prime Minister Paetongtarn Shinawatra’s eligibility to remain in office, following an audio clip allegedly involving Cambodia’s Hun Sen and remarks deemed harmful to Thai sovereignty. The case was submitted by 36 senators under Articles 82 and 170 of the constitution. In a unanimous 9-0 decision, the court agreed to hear the case, and by a 7-2 vote, it ordered the Prime Minister to temporarily cease performing her duties until a final ruling is issued. The Thai PM has “accepted” the court decision suspending her. SET +1.418% to 1105.01, USDTHB -0.222% to 32.43, 10y TGN +0.1bp to 1.603%.

Germany’s manufacturing PMI rose to 49.0 in June 2025 from 48.3 in May, the highest in 34 months, supported by the strongest new order growth since March 2022. Output increased for a fourth consecutive month, and purchasing activity rose for the first time in three years, reflecting improved confidence, which is now at its highest since February 2022. However, employment fell at the fastest pace since February, and inventories continued to shrink. Input and output prices dropped further amid strong competitive pressures, although the rate of decline slowed. Backlogs of work fell sharply, signaling underutilized capacity despite stronger demand. DAX -0.273% to 23844.34, EURUSD -0.009% to 1.1786, 10y Bund -5bp to 2.557%.

China’s Caixin manufacturing PMI rose to 50.4 in June from 48.3 in May, returning to expansion for the eighth month out of nine. Output grew at the fastest pace since November 2024, supported by stronger domestic orders. However, export demand remained weak, with new export orders falling for a third month. Firms continued to reduce headcounts amid cost concerns, and input and output prices declined further, with output charges falling at the fastest rate in five months. Confidence softened versus May and remained below average, as firms cited uncertainty in global trade and weak domestic demand. CSI 300 +0.17% to 3942.76, USDCNY -0.026% to 7.162, 10y CGB -0.2bp to 1.648%.

Australia’s manufacturing PMI slipped to 50.6 in June from 51.0 in May, indicating a further softening of growth. Output fell fractionally, and new orders returned to contraction, driven largely by a marked fall in export demand amid concerns over U.S. trade policy. Purchasing activity and inventories both declined, although firms modestly increased staffing to manage workloads. Backlogs of work fell sharply, reflecting spare capacity. Input costs rose due to higher raw material and shipping prices, but output price inflation moderated to a three-month low. Business optimism weakened to its lowest level since October 2024, amid rising economic uncertainty. ASX -0.016% to 4772.02, AUDUSD +0.076% to 0.6586, 10y ACGB -4.6bp to 4.116%.

What We're Watching

FOMC Chair Powell on ECB Sintra panel alongside BoE Bailey, BoJ Ueda, BoK Rhee and ECB Lagarde, with Q&A.

U.S. June S&P manufacturing PMI 52.0 expected to be unchanged from flash; the focus is on prices and jobs.

U.S. June ISM June manufacturing expected to come in at 48.7 from 48.5, with the focus on prices, inventories and jobs.

U.S. May JOLTS job openings are forecast at 7.3 million from 7.391 million, with the rate steady at 4.4% and some focus on quits and layoff rates.

U.S. June Wards total vehicle sales estimated at 15.35 million SAAR (seasonally adjusted annual rate), from 15.65 million.

What iFlow is Showing

Mood: In light risk-off territory, as marginal equity flows are still not sufficient to offset prior weakness.

FX: Strong flows in commodity-linked names, with AUD and CAD both defying month-end commodity FX rebalancing risk.

FI: Liquidity preference favored despite fiscal risk as France and U.S. see good inflows; frontier markets under pressure, led by Nigeria and Qatar outflows.

Equities: U.S. and Canada fall back into month-end; smaller markets benefit with Singaporean equities leading APAC gains. Developed market flows led by consumer discretionary; EM sees good demand among industrials and financials.

Quotes of the Day

“Faced with information overload, we have no alternative but pattern-recognition.” – Marshall McLuhan

“We are drowning in information but starved for knowledge.” – John Naisbitt

Economic Details

Eurozone June flash CPI rose 0.3% m/m, 2% y/y after 0% m/m, 1.9% y/y – in line with expectations. The core rate held steady at 2.3% y/y. The rate matched the ECB’s official target, as inflation in Germany unexpectedly fell, while France and Spain recorded modest increases and Italy’s rate remained unchanged. Service inflation rose 3.3% y/y from 3.2%, with food slowing to 3.1% y/y from 3.2% y/y. Non-energy industrial goods fell to 0.5% y/y from 0.6% y/y, while energy prices were -2.7% y/y after -3.6% y/y in May. Euro Stoxx 50 -0.182% to 5293.6, EURUSD -0.009% to 1.1786, BBG AGG Euro Government High Grade EUR -283.5bp to 0%.

Euro area consumer inflation expectations eased in May 2025, with median one-year and three-year forecasts falling to 2.8% and 2.4%, respectively; five-year expectations held steady at 2.1% and perceived past inflation remained at 3.1%. Income growth expectations rose to 1.0%, but expected spending growth declined to 3.5%. Economic sentiment improved slightly, with growth expectations less negative (-1.1%) and the expected unemployment rate falling to 10.4%. Home price expectations were unchanged at 3.2%, while expected mortgage rates fell to 4.4%. Consumers also reported a softening in perceived and expected credit access tightening.

Germany’s seasonally adjusted unemployment rate rose to 6.2% in June 2025, up from 5.8% a year earlier, with the jobless total at 2.91 million – an increase of 188,000 y/y. Long-term unemployment rose to 1.03 million, and youth unemployment climbed 7% to 258,000. Employment remained stagnant, with modest gains in part-time roles and among non-German nationals. Reported job vacancies dropped to 632,000, down 69,000 y/y. Despite a third consecutive rise in the IAB labor market barometer to 99.1, forward indicators suggest continued labor market weakness. Healthcare and the public sector added jobs, while there were falls in manufacturing and temporary employment. DAX -0.273% to 23844.34, EURUSD -0.009% to 1.1786, 10y Bund -5bp to 2.557%.

France’s manufacturing sector deteriorated further in June 2025, with the HCOB PMI falling to 48.1 from 49.8 in May, marking the sharpest contraction since February. Output declined after two months of growth as new orders dropped at the fastest pace in four months, driven by weak domestic and export demand. Despite falling workloads, firms slightly increased employment, supported by improved confidence in future output. However, purchasing activity and inventories were cut and supplier delivery times lengthened. Input prices rose modestly, but selling prices continued to fall amid intense competition, putting further pressure on margins. CAC40 -0.298% to 7643.09, EURUSD -0.009% to 1.1786, 10y OAT -5bp to 3.235%.

Switzerland’s manufacturing PMI rose sharply to 49.6 in June from 42.1 in May, marking its strongest monthly gain in over a year and the highest reading since February. The improvement was broad-based, with order backlogs returning to growth (50.4), production nearing expansion and job losses slowing. However, inventories continued to fall and delivery times lengthened, particularly in plastics and electronics. In contrast, the services PMI dropped by 7.7 points to 48.5, falling below the growth threshold. Protectionism fears intensified, with 60% of firms expecting more trade barriers in the coming year. SMI -0.043% to 11916.33, EURCHF -0.375% to 0.93132, 10y Swiss GB -1.1bp to 0.429%.

Italy’s manufacturing sector weakened in June 2025, with the HCOB PMI falling to 48.4 from 49.2 in May, marking the sharpest deterioration in three months. Output returned to contraction as new orders declined at the fastest pace since March, driven by weak domestic and foreign demand. Firms reduced employment, input purchases and inventories amid growing uncertainty. Supplier performance worsened slightly, and backlogs of work fell. Inflation pressures eased, with input costs and output prices both declining. While firms remained cautiously optimistic about future output, sentiment slipped to its lowest level since last November. Competitive pricing and global trade uncertainty continued to weigh on the outlook. FTSEMIB -0.374% to 39643.27, EURUSD -0.009% to 1.1786, 10y BTP -5.3bp to 3.423%.

Sweden’s manufacturing PMI fell to 51.9 in June from 53.1 in May, marking the second consecutive monthly decline and the lowest level since September 2024. Despite remaining in growth territory, the sector is showing signs of stagnation, especially in new orders, amid uncertainty following the U.S. tariff pause. The decline was broad-based, led by production, orders, employment and delivery times, while inventory purchases contributed positively. Input price pressures remained subdued, with the index for raw and intermediate goods prices at 50.3. Lower global commodity prices and a stronger krona are easing producer price pressures, potentially opening up room for more interest rate cuts. OMX -0.376% to 2484.11, EURSEK -0.1% to 11.1371, 10y Swedish GB -2.9bp to 2.316%.

Norway’s DNB Manufacturing PMI fell to 49.3 in June from 51.2 in May, indicating broadly stable to slightly declining industrial activity. The decline was driven by a sharp drop in new orders (44.5) and production (48.6), while employment improved slightly to 52.9. The composite index of production, orders and employment dropped 2.8 points to 48.1 – its lowest in a year with the exception of April. Export demand helped reduce inventories, with the stock index falling to 48.5. Supplier delivery times lengthened (53.5), typically associated with stronger activity. Input price growth remained high but slowed, with the price index easing to 60.0. OSE -0.369% to 1615.3, EURNOK -0.274% to 11.8463, 10y NGB -3.7bp to 3.79%.

Spain’s manufacturing sector saw modest improvement in June 2025, with the HCOB PMI rising to 51.4 – the highest reading of the year so far. Output grew at its fastest pace since December, while new orders returned to growth for the first time since January. However, export demand remained weak amid tariff-related uncertainty. Input and output prices continued to decline, supported by a strong euro and subdued demand. Firms cautiously drew down inventories and scaled back purchasing activity. Confidence reached a four-month high, supported by new product plans and investment expectations, although concerns remain over global trade tensions. IBEX 35 -0.171% to 13897, EURUSD -0.009% to 1.1786, 10y Bono -4.9bp to 3.193%.

Czechia’s manufacturing PMI rose to 50.2 in June 2025, marking the first expansion in over three years. Output increased at the strongest rate since February 2022, driven by renewed domestic demand, although export orders continued to decline. Business confidence improved, but firms remained cautious, with further job cuts and reductions in input buying. Output charges fell slightly, reflecting intense price competition, while input cost inflation remained muted. Firms utilized existing inventories to meet production needs, with finished goods stocks rising modestly for a third straight month. Overall, the data suggest a tentative recovery, though risks remain. Prague SE -0.209% to 2152.88, EURCZK -0.122% to 24.699, 10y CZGB -0.7bp to 4.259%.

Swiss retail sales fell by 0.8% y/y in nominal terms in May, though real (inflation-adjusted) sales were stable, according to provisional data from the Federal Statistical Office (BFS). While demand declined for food, beverages and tobacco, sales of information and communication technology equipment increased. Meanwhile, Swiss service sector revenues declined by 2.3% y/y in April 2025, marking a more pronounced monthly drop after gains in January and February. The steepest declines were seen in wholesale trade (-10.8%) and audiovisual media and broadcasting (-9.4%), while strong growth was recorded in travel services (+24.0%) and legal, tax and audit services (+15.6%). SMI -0.043% to 11916.33, EURCHF -0.375% to 0.93132, 10y Swiss GB -1.1bp to 0.429%.

Türkiye’s manufacturing PMI fell to 46.7 in June, its lowest level in eight months, signaling a sharper deterioration in business conditions. Output contracted at the steepest pace since October 2024, driven by ongoing declines in new orders, including exports. Firms cut employment and purchasing activity, while input costs rose due to currency weakness and geopolitical concerns, particularly linked to Iran. However, subdued demand limited firms’ ability to pass on higher costs, resulting in the weakest output price inflation of 2025. Despite growing stockpiles of finished goods, business sentiment remained cautious, completing a difficult first half of the year. BI 100 +1.359% to 10083.72, USDTRY +0.073% to 39.8423, 10y TGB -24bp to 30.69%.

Poland’s manufacturing PMI dropped sharply to 44.8 in June, from 47.1 in May. This was the lowest figure since October 2023 and marks the steepest two-month decline since mid-2022. New orders and output both contracted at the fastest rates in over 18 months, with weak domestic and export demand, particularly from Europe. Firms responded by cutting jobs, input purchases and inventories. While input prices fell slightly, output prices edged higher. Business optimism weakened markedly, with firms citing tariff uncertainty and subdued demand as key concerns. The near-term outlook remains fragile, though stabilization in Eurozone demand may offer limited support. WIG -0.029% to 104661.2, EURPLN -0.147% to 4.2386, 10y PGB -4.7bp to 5.477%.

Dutch manufacturing conditions improved in June 2025, with the Nevi PMI rising to 51.2 from 49.0 – the first expansion in a year. Growth was supported by rising new orders, including exports, and a modest increase in employment and output. Business confidence hit its highest level since February. Input and output price inflation eased to multi-month lows, though supply chain delays worsened due to geopolitical tensions. The recovery was linked to improving demand from Germany and strength in the chip sector. Firms remained cautious, cutting purchases and inventories despite improved sales prospects. AEX -0.209% to 911.37, EURUSD -0.009% to 1.1786, 10y NGB -5.1bp to 2.757%.

U.K. shop price inflation rose to 0.4% y/y in June, up from -0.1% in May and above the three-month average of 0.1%. Food inflation accelerated to 3.7% (from 2.8%), driven by rising fresh food (+3.2%) and ambient food prices (+4.3%), amid higher wholesale meat costs and weather-impacted harvests. Non-food prices remained deflationary at -1.2%, though this was a smaller decline than May’s -1.5%, helped by discounts in DIY and gardening. Retailers attributed rising prices to last year’s Budget-related cost pressures, and warned further inflation could follow without government support on business costs such as national insurance and business rates. FTSE 100 -0.024% to 8758.9, GBPUSD +0.212% to 1.3761, 10y gilt -4.6bp to 4.443%.

U.K. manufacturing conditions remained weak in June, though the downturn showed signs of easing. The PMI rose to 47.7, its highest level since January, as declines in output, new orders and employment slowed. Optimism improved to a four-month high, with 46% of firms expecting higher output in the year ahead. However, new export orders fell for the 41st consecutive month amid global demand weakness and tariff uncertainty. Inventory and backlogs shrank further, while job cuts continued across all firm sizes. Input and output price inflation slowed, but geopolitical tensions and policy uncertainty remain key risks to stabilization.

U.K. annual house price growth slowed to 2.1% in June from 3.5% in May, with prices falling 0.8% m/m after seasonal adjustment. The average (non-adjusted) house price dipped to £271,619. Northern Ireland remained the strongest-performing region with 9.7% y/y growth, while East Anglia was the weakest at 1.1%. Nationwide’s Chief Economist cited post-stamp duty hike softness in demand, though underlying housing conditions remain supportive. Most U.K. regions saw a Q2 slowdown, but rising real incomes, strong household balance sheets and a potentially lower bank rate could support the market later in the year.

Hungary’s trade surplus stood at EUR 739mn in May 2025, down EUR 281mn y/y. Export volume rose 3.2% y/y, while imports grew faster, at 5.4%. In value terms, exports totaled EUR 12.2bn (+2.0% y/y) and imports EUR 11.5bn (+4.8%). Machinery and transport equipment led export growth (+6.4%), while fuels and electric energy surged 89% y/y. Manufactured goods exports fell 4.8%, and food exports declined by 9.2%. Trade with the EU-27 remained in surplus at EUR 1.0bn, while extra-EU trade posted an EUR 279mn deficit. For January-May, Hungary’s trade surplus was EUR 6.1bn, with exports up 1.0% and imports 2.7% y/y. Budapest SI -0.161% to 97510.02, EURHUF -0.176% to 398.91, 10y HGB 0bp to 7.04%.

Japan’s manufacturing PMI edged up to 50.1 in June from 49.4 in May, indicating stabilization after nearly a year of contraction. Output increased for the first time since last August, driven by hopes of improved customer demand, but overall new orders and export sales continued to decline. Employment rose modestly for a third month, and business optimism improved to its highest level since January. Input costs and selling prices accelerated slightly, reflecting higher material, labor and transport expenses. Firms remained cautious on purchasing and inventories, awaiting clearer demand signals amid continued global uncertainty. Nikkei -1.238% to 39986.33, USDJPY -0.709% to 143.01, 10y JGB -3.8bp to 1.394%.

Japan’s consumer confidence index rose to 34.5 in June 2025, up 1.7 points from May. All subcomponents improved: overall livelihood (32.4), income growth (38.9), employment (38.3) and willingness to buy durable goods (28.2). Meanwhile, the share of households expecting prices to rise over the next year decreased to 92.1% (down 1.5 points), while those expecting prices to stay the same rose to 3.1% and those expecting them to fall increased to 2.5%. Nikkei -1.238% to 39986.33, USDJPY -0.709% to 143.01, 10y JGB -3.8bp to 1.394%.

India’s manufacturing PMI rose to a 14-month high of 58.4 in June from 57.6 in May, signaling a strong end to the fiscal quarter. Growth was fueled by a sharp rise in new orders – both domestic and export – as international sales surged at the third-fastest rate since 2005. Output increased at its fastest pace in over a year, particularly in the intermediate goods segment. Employment rose at a record pace, driven by short-term recruitment needs. Input cost inflation eased to a four-month low, but output prices rose markedly. Firms tapped into inventories to meet demand, while delivery times improved. Confidence remained positive despite competition and inflation concerns. SENSEX +0.097% to 83687.73, USDINR -0.238% to 85.5488, 10y INGB -1.8bp to 6.306%.

Malaysia’s manufacturing PMI rose to 49.3 in June from 48.8 in May, its highest since February, indicating a softer contraction in operating conditions. Output and new orders continued to fall, but at milder rates, while export demand showed tentative improvement. Notably, employment rose for the first time in nine months. However, input cost inflation accelerated to a seven-month high, driving the strongest increase in output prices since August 2024. Although signs of stabilization emerged, business confidence remained subdued and below the long-run average, as firms remained wary of cost pressures and weak global demand. KLCI +0.304% to 1537.62, USDMYR -0.361% to 4.195, 10y MGB +0.3bp to 3.518%.

Indonesia’s manufacturing PMI dropped to 46.9 in June from 47.4 in May, marking the second-lowest reading since August 2021. The decline was driven by the sharpest fall in new orders in nearly four years, prompting reductions in output, purchasing and staffing levels – the latter fell at the fastest rate since September 2021. Export sales stabilized after previous declines, but domestic demand remained weak. Input inflation moderated to its softest pace since 2020, leading firms to raise selling prices only marginally. Business confidence weakened to an eight-month low, reflecting growing concern over global and domestic growth prospects. JCI -0.536% to 6890.532, USDIDR -0.247% to 16198, 10y IDGB -1.6bp to 6.612%.

Indonesia recorded y/y inflation of 1.87% in June 2025, with the consumer price index reaching 108.27 points. The highest provincial inflation was in South Papua at 3.00%, while the lowest was in West Sumatra at 0.45%. The deepest provincial deflation occurred in West Papua at -0.67%. At city/regency level, Luwuk saw the highest inflation at 4.00%, while the deepest deflation was in Mukomuko at -1.34%. Month-on-month inflation came in at 0.19%, while YTD inflation reached 1.38%. Core inflation was 2.37% y/y, 0.07% m/m and 1.24% YTD.

Indonesia’s exports rose 6.98% y/y to $111.98bn in January-May 2025, with non-oil and gas (non-migas) exports up 8.22% to $106.06bn. In May alone, exports increased 9.68% to $24.61bn, including an 11.80% rise in non-migas exports to $23.50bn. Imports for January-May 2025 grew 5.45% to U.S.$96.60bn, while non-migas imports climbed 7.92% to $82.96bn. In May, imports rose 4.14% to U.S.$20.31bn, and non-migas imports were up 5.44% to $17.67bn.

Thailand’s manufacturing PMI climbed to 51.7 in June, up from 51.2 in May, signaling the fastest improvement in business conditions since August 2024. Output rose at the strongest pace in nearly a year, supported by growth in both domestic and export orders. Purchasing activity increased for the first time in four months, and firms modestly replenished input inventories. However, employment was unchanged, reflecting weaker business optimism – the lowest in over a year. Input and output prices rose after months of decline, driven by higher raw material costs. While headline momentum improved, firms remained cautious amid global uncertainties. SET +1.418% to 1105.01, USDTHB -0.222% to 32.43, 10y TGN +0.1bp to 1.603%.

The Philippines’ manufacturing PMI rose to 50.7 in June from 50.1 in May, indicating a modest improvement in sector conditions. Output returned to growth, reversing May’s marginal decline, and new orders increased at a slightly faster pace, helped by promotional efforts and improved local demand. Employment rose for the first time in four months, marking the strongest job creation since November 2024. However, firms struggled with shortages of materials and longer input delivery times, which limited inventory restocking. Inflation pressures remained subdued, with input and output price growth easing. Optimism improved but remained muted by historical standards. PSEi +0.926% to 6423.85, USDPHP +0.024% to 56.335, 10y PHGB -5.9bp to 6.189%.

Taiwan’s manufacturing PMI fell to 47.2 in June from 48.6 in May, the sharpest deterioration in 18 months. Output and new orders declined at the fastest rates since late 2023, with export sales falling due to weak global demand and uncertainty surrounding U.S. tariffs. Employment, purchasing activity and input inventories all declined. While input costs rose modestly, firms cut selling prices for the fourth consecutive month to remain competitive. Business sentiment remained negative for the third straight month, though less pessimistic than in April and May. Subdued demand and trade conditions continue to weigh heavily on the sector. TAIEX 1.338% to 22553.72, USDTWD -1.41% to 29.17, 10y TGB -3.4bp to 1.385%.

South Korea’s manufacturing PMI rose to 48.7 in June from 47.7 in May, reflecting a slower pace of contraction. Output and new orders declined for a fourth straight month, but reductions were less severe. Employment fell after a brief uptick in May, and outstanding work continued to decline. Input cost inflation eased to an eight-month low, contributing to only modest output price increases. Despite subdued activity, business confidence reached a 13-month high, supported by hopes of stronger domestic demand and new product launches. However, firms remained cautious, with purchasing and inventory levels both declining. KOSPI +0.584% to 3089.65, USDKRW -0.008% to 1353.65, 10y KTB +2.2bp to 2.807%.

South Korea’s exports rose 4.3% y/y to $59.8bn in June 2025, while imports increased 3.3% to $50.7bn, yielding a $9.1bn trade surplus. June export value and daily average exports ($2.9bn) hit record highs for the month. Semiconductors led gains, up 11.6% to $15.0bn. Bio-health exports surged 36.5%, ships rose 63.4% and automobile exports reached $6.3bn, with strong EV and used car sales. Meanwhile, petrochemicals and petroleum products declined. Exports to seven of nine major markets grew, with sizeable gains to the EU (+14.7%) and Taiwan (+31.0%), while shipments to China and the U.S. dipped. H1 exports were flat y/y at $334.7bn.