Week in review
- U.S. May core CPI inflation at 0.13%, cooler than consensus
- U.S. NFIB Small Business Optimism Index up three points in May to 98.8
- NY Fed’s 1Y consumer inflation expectations fell to 3.2% in May
Week ahead
- U.S. Fed policy decision
- China May activity
- UK CPI
Thought of the week
Trade data offer us a glimpse into the early impact of recent tariffs. Specifically for China, exports to the U.S. continued to fall (-14.7% m/m and -34.5%y/y) despite a temporary tariff reprieve in mid-May. However, exports to non-U.S. markets remained resilient, especially to ASEAN countries, which is a pattern consistent with structural shifts in Chinese exports since the 2018-2019 U.S.-China trade tensions. The U.S. administration’s strategy against transshipment via third-party countries remains a key risk regarding whether Chinese exports can remain resilient in the future. Bilateral U.S.-China negotiations have progressed, while issues such as rare earths, semiconductors, student visas, etc., remain challenging to fully resolve. Near-term stability in Chinese exports would reduce the need for aggressive policy easing. However, a slower pace of export growth exacerbates concerns of excess capacity continuing to fuel deflation. Outside of exports, if the recent weakening in real estate data and employment sub-indices in PMIs continue, policymakers’ supportive stance on growth could be strengthened in the July Politburo meeting.
China exports by destination
3 month moving average, year-over-year change
Source: CEIC, China Customs, J.P. Morgan Asset Management. Data reflect most recently available as of 13/06/25.
Market data
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