Asia week ahead: FOMC minutes, geopolitics

The past week saw markets being balanced between the pressure from rising yields, which ticked up in the US on account of robust economic indicators, and the broad optimism from resilient growth conditions. 

Source: Bloomberg

Meanwhile the lack of clarity surrounding geopolitics appears to remain the case as we pen this. With the new week, where the May Federal Open Market Committee (FOMC) meeting minutes will be the highlight, watch for its impact on markets while keeping an eye on developments particularly surrounding US-China trade ties.

FOMC minutes

A series of US indicators including retail sales and industrial production were seen inspiring the upsides for US treasury yields in the week, elevating the greenback and weighing upon Asian equity markets. While we have yet to see the close for most markets in the region, it is suffices to say that most regional indices will end the week in red. The relevance of monetary policy, as mentioned last week, dominates and makes the May’s Fed minutes and US data very prevalent for Asia’s trade next week.

The mixed language arriving from the last Fed meeting statement perhaps elevates the importance of the upcoming minutes release. While the Fed had stuck to their view of ‘further gradual increases’ in rates, the comments surrounding inflation had perhaps invited multiple interpretation. Providing the outlook on inflation, the Fed mentioned that ‘Inflation on a 12-month basis is expected to run near the committee’s symmetric 2 percent objective over the medium term’. The idea that inflation is expected to come in strong had in part been clouded by the choice of ‘symmetric’ as a descriptor, highlighting that the Fed could be willing to allow inflation to overshoot. Look to the minutes for more details on the matter. Fedspeak for the week also includes Fed chair Jerome Powell on Friday, one for the radar. Likewise for the impact on the greenback, with the US dollar index seemingly stalling ahead of 93.645.

Economic indicators to watch for the week include US Fed National Activity index, preliminary May Markit manufacturing PMI and new and existing home sales updates among others.


While we have yet to glean clear insights into the US-China trade talk in Washington thus far, it is perhaps safe to say that the US-China trade issue will remain a top watched item into next week. The approach of the consultation deadline on 22 May for the proposed $50 billion tariff on Chinese ends would make the on-going talk a key bridge to any potential conciliatory conclusions. Risk assets such as the yen and gold would certainly be watching official views here for guidance.

For gold that came under pressure from the rising yield and strengthening US dollar, prices had largely held steady into the end of the week around $1290 levels, supported in part by the uncertainty in geopolitics. Developments from the abovementioned and also North Korea could play to the effect of guiding prices, where South Korean and US leaders are also expected to convene in the coming Tuesday on the matter.

Asia indicators

Although absent Chinese indicators amongst the lot, Asian markets will be welcoming a series of tier-1 releases. Updates for Q1 GDP will be seen from Thailand, Singapore and Taiwan. Notably, the latter two could find muted impact given the releases being final readings. A fuller picture of Asia’s price trajectory would also be provided given the releases in Hong Kong, Singapore and Malaysia in the week. Over and above the growth update, the local Singapore market would also be seeing industrial production data due on Friday.  

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