0520 GMT - If oil prices continue to normalize, inflation pressures should ease and central banks should have less need to tighten aggressively, Columbia Threadneedle Investments' Anthony Willis says in a note. "In that environment, the outlook remains positive, and markets may find that the second half is less about reacting to shocks than playing for time while the data provide a clearer signal," the senior economist says. That said, investors should stay alert to the risk that inflation proves stickier than expected, particularly if oil prices rise again or domestic price pressures broaden, he says. "But the central case is more constructive than it was at the height of recent market anxiety." (emese.bartha@wsj.com)
0517 GMT - Valuations look less supportive ahead of the U.S. Treasury's $58 billion auction of three-year notes Tuesday, J.P. Morgan strategists say in a note. Given less supportive valuations and the broader macro backdrop, they think the auction "likely requires more of a concession in order to be digested smoothly." Three-year yields have traded in a fairly tight range over the last month, and are trading just 5 basis points below where they were at the June auction, the strategists say. However, the sector has richened versus other maturities and now appears roughly fairly valued to modestly rich after adjusting for the level of rates and the shape of the curve over the last three to six months, they say. (emese.bartha@wsj.com)
0514 GMT - The outlook for central banks is shifting again, Columbia Threadneedle Investments' Anthony Willis says in a note. Earlier this year, markets feared policymakers would be forced into more aggressive rate hikes as oil prices spiked following the U.S.-Iran conflict, the senior economist says. "Those fears have eased as oil has moved back towards $70 a barrel, reducing near-term pressure from energy markets," he says. So far, the inflation impulse does not point to a broad-based second wave, he says. "While energy has lifted headline measures, there is limited evidence that it is feeding decisively into wider price-setting behavior." That matters for investors, Willis says. (emese.bartha@wsj.com)
0448 GMT - The Philippine Central Bank is likely to further hike rates, despite inflation easing in June, says ING's Deepali Bhargava in a note. Prices eased last month, offering some reassurance that inflation has peaked. However, underlying price pressures remain elevated and are likely to keep Bangko Sentral ng Pilipinas cautious in its policy stance. Headline inflation could also remain volatile, as a potential strong El Nino could push up food prices in the coming months, Bhargava adds. ING expects the BSP to deliver another 50 bps of rate hikes in 2H. (amanda.lee@wsj.com)
0439 GMT - Bangko Sentral ng Pilipinas is likely to hike its policy rate by 75 basis points over the remainder of 2026, Goldman Sachs economists say. Headline inflation eased to 6.4% on year in June from 6.8% in May as fuel and food prices fell. "However, the broader inflation environment is less benign," they write in a note. Core inflation was higher than expected last month, suggesting that underlying price pressures persist despite the near-term relief from lower energy prices. (amanda.lee@wsj.com)
0412 GMT - Malaysia's central bank is expected to leave its benchmark policy rate unchanged again at 2.75% on Thursday, according to all nine economists polled by The Wall Street Journal. Malaysia's inflation remains contained, supported by government fuel subsidies that have cushioned the economy from higher global energy costs, Goldman Sachs says in a note. A recent cut in the subsidized diesel price is also expected to further ease price pressures, it says. Against this backdrop, Bank Negara Malaysia is likely to leave monetary policy settings unchanged, GS adds. (yingxian.wong@wsj.com)
0321 GMT - AMP chief economist Shane Oliver has produced a list of risks to markets in the next year, with a key one focused on the White House. President Donald Trump will be less constrained after the coming midterm elections, he says, with a window next year before the presidential election in 2028 where he could might decide to ramp up foreign adventures including another go at Iran, and maybe Greenland and Cuba. This is particularly so if he loses the House and the Senate in November, Oliver adds. (james.glynn@wsj.com; X @JamesGlynnWSJ)
0245 GMT - The Singapore dollar edges higher against its U.S. counterpart in the Asian session on reduced Fed rate-increase expectations following recent U.S. data. "Markets further pared expectations for Fed rate hikes over the next 12 months, after the ISM services report indicated easing cost pressures," CIMB Treasury and Markets Research analysts say in a report. The ISM services reading reinforces expectations of a less-hawkish Fed, the analysts add. The U.S. dollar is 0.1% lower at 1.2917 Singapore dollars, FactSet data show. (ronnie.harui@wsj.com)
0223 GMT - Thailand's inflation is likely to stay contained, two economists at Goldman Sachs Research say, noting CPI data released Monday. "June headline CPI inflation surprised on the downside," the economists say. Although core CPI inflation was firmer than GS had expected, "we do not think this should be a major concern at this stage," they say. "Forward-looking surveys point to a moderation in businesses' output price expectations in June, suggesting limited evidence of sustained underlying price pressure," the economists add. GS continues to expect the BOT to leave the policy rate unchanged at 1.00% through 2026. (ronnie.harui@wsj.com)
0138 GMT - Oil prices may be falling, but rising interest rates, weak consumer and business confidence, stalling housing investment and a prolonged cost-of-living crisis have cut Australia's growth prospects, says Deloitte Access Economics. Amid the gloom, Deloitte slashes its forecast for real economic growth in Australia for 2026-27 from 1.9% to 1.3%. The economy is now expected to limp along at less than 2.0% annual growth for the next two years, including a growth of just 1.1% over the year to December 2026, the longest stretch of sub-2% growth since the early 1990s recession. (james.glynn@wsj.com; X @JamesGlynnWSJ)
0110 GMT - Japan remains a potential source of global market volatility as yen weakness persists alongside rising long-end JGB yields, OCBC strategists say. Perceptions that the BOJ is behind the curve is fueling depreciation pressure on the yen, and OCBC reckons investors may see future rate hikes as driven more by the Takaichi administration's policy direction than economic data alone. Further yen depreciation would likely weigh on regional currencies, particularly the won and the baht, but OCBC thinks the larger spillover risk lies in higher long-end JGB yields. That may already be spurring upward pressure on Treasury, gilt and bund yields, and if JGB yields keep climbing, global yields could be pushed higher still, they say. (fabiana.negrinochoa@wsj.com)
0108 GMT - The slowdown in Japan's wage growth in May is unlikely to deter the Bank of Japan from raising rates further, says Abhijit Surya at Capital Economics in a commentary. Preliminary estimates released earlier showed Japan's labor cash earnings growth slowed to 3.2% in May from 3.6% in April, the senior APAC economist notes. "Despite their recent easing, measures of base pay growth remain well above their 2025 average and elevated relative to historical norms," Surya says. "We doubt today's data will alter the BoJ's assessment that the labor market is very tight," the economist adds. Capital Economics maintains its view for BOJ to raise rates to 2% by end-2027. (ronnie.harui@wsj.com)