瑞穗日报

Jul 04, 2025 FX(DXY:+0.0%) Three Take-Aways -USDgainedagainstmostG10peersasGBPhadamildrecoverytooutperformG10peersamidendorsementofchancellorReevesbyPMStarmer.JPYunderperformedduetohigherUSTyieldswiththeUSD/JPYrisingtotouch145.EURsoftentowardsmid-1.17.AUDremainshoveringintheupperhalfofmid-65cents. 1)OBBBAhaspassedtheHouseandfiscalimplicationsmayonlyberevealgiventhatUSmarketswillbeon4Julyholidays. 2)US NFP and ISM services outperformance sent US equitiesrallyingwhileratecutexpectationswerepushedback. 3)Amidconfirmation that 20%isVietnam's final rate,Taiwan'sequitiesrally met with realistic preparation with assistance forSMEsthoughfiscalmeasuresforhouseholdsappearoutsized. -InEM-Asia,despiteanammendmenttoshareholderrightswhichaidedKOSPItooutperformregionalbourses,KRWledlossesasPresidentLeesaidthat US talks are not easy.In contrast,TWD continuedoutperformanceas inflows into equities stayed strong yesterday.Thatsaid,further excessive moves may face prospections of CBC'sintervention. MACROTHEME:FullForceAhead? -Trump's One Big Beautiful Bill has successfully been forcedthroughtheHouseofRepresentativesina218-214vote.ThefiscalimplicationsmaynotbefullyfeltbymarketsgivenitslatepassagelastnightandtheUSIndependenceDayholidaytonight.AlongwiththeincreaseinUS$3trillionofdeficitoverthenext10years,thefederaldebtceilingwasalsoraisedbyUS$5trillion.Fornextyear,USfiscaldeficitislikelytoapproachthe7%ofGDPmark. -OnthatnotetheHKMAhasintervenedforathirdtimeinthepastweekastheUSD/HKDreachthetradingband. Taiwan:AssessingInterventions -Inmid-June,TaiwanembarkedonsemiconductorrestrictionsonChina,barringfirmsfromsellingtoChina'sHuaweiandSMIC,withoutalicense.Whileheadlinesappeartoimplysubstantialrestrictions,theconsequentimpactremainuncleargiventhattheneedforapprovalsmaynotimplyequivalencetoaban.Inanycase,Bidenera'sexportrestrictionshavealreadycaused a significant drop in the share of semiconductorrelatedexportstoChina(frommorethan20%in2021to5%in2025)alongsideTaiwan's diversification efforts and China's drive for selfreliance.Assuch,thesecurbsarelikelytoleantowardsdampeningsemiconductorexportsratherthantriggeringanoutrightcollapse. -ThebarrageofUSeconomicdatareleasewasalsolargelyonapositvemoodwhichsentUSequitiesrallyinghigher.USnonfarmpayrollsexceededexpectationsforJunewith147kjobsandanslightupwardrevisionof16kforthepriortwomonths.Theunempoymentratealsodeclinedto4.1%fromMay's4.2%thoughitwasassistedbyasmallerlabourforce.Joblessclaimsalsoedgedlower. -ISM services index was similarly more upbeat than expected.Pricespaid sub-index came in slightly lower while new ordersrecoveredbackintoexpansionaryterritory.Thatsaid,employmentsub-indexsankdeeperintocontractionaryterritory.Onthewhole,itshouldbenotedthattheISMservices'50.8printisstillsignificantlylowerthanthemajorityofprintsinrecentyears. -Onabroadernote,TaiwanappearstobeenjoyingtailwindsonthebackoftheUS-VietnamdealwiththeTAIEXgaining0.6%.Withsubstantialpresenceof established manufacturing bases in Vietnam,the financialmarketbuoyancy is not surprising.Nonetheless,the impact on profitmarginsfromthe20%tariffswillremainsignifcantbutmorecrucially,withthebaselineof10%tariffslikelytohold,theresultant10%deltawithbestcase scenario may not present an appealing case for anuprootingofoperations. -The robust labour market and economic activity outperformingpessimisticexpectations resulted in UST yields soaring across thecurveledbythefrontend.MarketsreduceoddsofaJulycuttolessthan5%from20%atthestartoftheweek. -AsidefromTaiwan'sexportbeingfrontloadedtotheUnitedStates,surgeinexportstoASEANcountriesalsoreflectsupplychainlinkagesastheregionalsoembarksonfrontloadingefforts. -Nonetheless,thisdidnotdeterBessentfromsayingthattheFOMCis"alittleoffintheirjudgement".HealsoaddedthathehopesthattheycanfilltwoseatsintheFOMCin2026whichimpliesthathehopesthatPowellcanvacatehisboardpositionwhenhestepsdownasFedChairin May 2026 because Powell has a separate term asGovernoruntil 2028 while Adriana Kugler position will be open in2026. -WhileTaiwan'sexportprowessisundoubted,recentFXvolatilityhasresultedintheneedfortheMinistryofEconomicAffairssettingupataskforcetoprovidefinancingsupportandassistSMEsinapplyinghedgingtoolstomanagerisks.TheresultantincreaseinhedgingactivtymayseefurtherTWDstrength,yetexcessivestrengthwillbetemperedbyCBCintervention. -While Vietnam's deal is said to be finalised in principle,USTRRepresentativeGreerwillbeworkingwiththeEUtoseewhatwecando,accordingtoBessent. -HouseholdsmayalsobegettingaboostasthegovernmentmaybepassingaspecialbillinvolvinguniversalcashhandoutofNT$10,000.Theextentof handout appears outsized relative to 2023's handout ofNT$6000.Allin,interventioninFXandrealeconomicactivityshouldbeappropriatelysizedandtargetedfor. Yields(2Y:+9.7bp;10Y:+6.9bp;30Y:+6.0bp) -USTyieldcurvebearflattened. Equities(Nasdaq:+1.0%;S&P500:+0.8%;Dow:+0.8%) -USequitiescontinuedtheirrally. RESEARCHTEAM Vishnu Varathan | Serena Zhou | Tan Boon Heng | Tan Jing Yi MARKET COMMENTARY DISCLAIMER THIS DO