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DLX Add-ins for all versions of Excel provide instant data updates of entire workbooks

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[Matlab](http://matlab.com) by The MathWorks lets you access, visualize, and analyze historic time-series data to identify patterns or uncover complex relationships. From within a single environment you can:

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Stata

[SAS](https://www.sas.com) provides an integrated environment for predictive and descriptive modeling, data mining, text analytics, forecasting, optimization, simulation, experimental design and more. From predictive analytics to model deployment and process optimization, SAS provides a range of techniques and processes for the collection, classification, analysis and interpretation of data to reveal patterns, anomalies, key variables and relationships, leading ultimately to new insights and better answers faster.

[SASEHAVR](http://support.sas.com/documentation/cdl/en/etsug/67525/HTML/default/viewer.htm#etsug_sasehavr_gettingstarted01.htm) is a seamless interface between Haver and SAS data processing that enables SAS users to read economic and financial time series data that reside in a Haver Analytics DLX (Data Link Express) database. [SASEHAVR](http://support.sas.com/documentation/cdl/en/etsug/67525/HTML/default/viewer.htm#etsug_sasehavr_gettingstarted01.htm) requires both SAS/ETS and Base SAS Software.

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[RATS (Regression Analysis of Time Series) Econometric Software](https://estima.com) by Estima is a leading econometrics and time-series analysis software package. It provides ability to do linear and non-linear least squares, forecasting, SUR and ARIMA models and in addition, supports advanced techniques such as GMM, ARCH and GARCH models, state space models, and more.

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RATS

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A popular open source option for statistical computing and graphics that is available on many UNIX platforms, Windows and MacOS

Estimating, evaluating, and forecasting ARIMA models

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Estimating autoregressions, granger causality tests, and impulse response functions

Understanding the concept of cointegration and testing using the Enger-Granger test

Estimating and forecasting with vector error correction models

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Teaches econometrics and forecasting at the University of Colorado Denver. He has over 15 years of econometric experience in both the private and public sector.

Daniel L. Jerrett, Ph.D.

Abdel M. Zellou, Ph.D.

Bootcamp and Econometric Tools 1 & 2

Econometrics Training: Applied Time Series in R

Session 5: Multivariate Models Part 1

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Haver partners with SmartMacro Labs to offer a two week immersive online course introducing participants to the power of the Python programming language. This applied hands-on training develops statistical economics skills with a concentration on economics and finance.

Gain proficiency in building modern time-series models in Python through real-world applications. Designed for professionals in both the public and private sector, the course does not require prior experience, assuming only that participants have a basic understanding of regression and statistical concepts.

Proficiency working in Jupyter notebooks and the Python environment

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Remote Training: Applied Time Series in Python

Deflation continues in China

Tom Moeller

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Wholesale inventories fell 0.3% (+1.4% y/y) during May after edging 0.1% higher in April. The decline was revised from a 0.2% fall in the advance release issued last week. A 0.3% decline had been expected in the Informa Global Markets survey. Durable goods inventories fell 0.8% during May (-0.0% y/y) after increasing 0.1% in April. Furniture & home furnishings inventories were off 2.2% (+4.5% y/y) after weakening 0.8% in April. Professional & business equipment inventories declined 1.7% (+5.1% y/y) and reversed April’s 1.6% increase. Motor vehicle & parts inventories were off 1.5% (-2.6% y/y) following a 0.6% rise. Machinery inventories fell 0.8% (-2.0% y/y), about as they did in April. Electrical equipment inventories eased 0.1% (-3.2% y/y) after falling 0.5% in April. To the upside, hardware & plumbing equipment inventories rose 1.3% (8.1% y/y) following two straight 1.8% increases. Lumber inventories rose 1.0% (3.4% y/y) after falling sharply in both of the prior two months. Inventories of nondurable goods rose 0.5% during May (3.9% y/y) after rising 0.2% in April. Drug inventories surged 1.8% (5.1% y/y) after a 2.0% gain while apparel inventories gained 0.5% (-0.7% y/y) following a 0.9% rise. Grocery inventories rose 0.3% (11.0% y/y) after a 1.2% rise. Paper inventories rose 0.3% (6.9% y/y), reversing the 0.7% April decline, while chemical inventories dropped 1.9% (-1.8% y/y) after declining 1.2% in April. Petroleum & petroleum product inventories rose 2.5% (-8.1% y/y) following a 7.5% drop. Farm product inventories declined 3.8% (4.9% y/y) after two straight months of 2.6% decline.

Wholesale sales declined 0.3% (+4.8% y/y) in May after holding steady in April. A 0.2% increase had been expected in the Action Economics Forecast Survey. Sales of nondurable goods declined 0.8% (+2.3% y/y) after easing 0.1% in April. Paper sales slipped 0.8% (0.7% y/y) after rising 0.9% in April. Drug sales eased 0.3% (+12.0% y/y) after rising 0.2% in April. Petroleum sales weakened 2.8% (-13.3% y/y) after declining 3.3% in April. In contrast, sales of apparel strengthened 1.9% (8.1% y/y), the same as in April. Grocery store sales increased 1.0% (6.7% y/y) after a 1.4% gain. Sales of durable goods rose 0.2% (7.6% y/y) following a 0.1% uptick in April. Auto sales rose 3.6% (5.2% y/y) after easing 0.1% in April. Sales of electrical equipment strengthened 1.2% (15.7% y/y) following a 0.4% decline. Metals & minerals sales gained 0.5% (0.2% y/y) following a 1.8% decline. Working lower, furniture sales declined 1.6% (+3.6% y/y) after a 2.3% increase. Professional equipment sales eased 0.3% (+8.1% y/y) following a 1.0% increase. Machinery sales weakened 0.9% (+5.2% y/y) after increasing 0.8% in April.

The May inventory to sales ratio in the wholesale sector stood at 1.3 for the fourth straight month. The durable goods I/S ratio eased to 1.67 after two months at 1.69, down from the 1.81 high in March of last year. The ratio ranged from a 2.86 high for machinery to 0.95 for electrical equipment. The nondurable goods I/S ratio rose to 0.95 after two months at 0.93. The I/S ratio for apparel was 2.04 in May while for petroleum, it was 0.33.

The wholesale trade figures are available in Haver's **USECON** database. The expectations figure for inventories is contained in the **MMSAMER** database. Expectations for sales are from the **AS1REPNA** database.

The minutes of the latest **FOMC meeting** can be found [here](https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20250618.pdf).

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- Inventory decline reverses two months of increase.
- Sales decline is first in four months.
- I/S ratio steadies at three-year low.

U.S. Wholesale Inventories & Sales Decline in May

Winnie Tapasanun

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Mortgage applications rose 9.4% w/w (36.6% y/y) in the week ending July 4 after a 2.7% rise in the week ending June 27, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. The latest reading was the largest of three consecutive w/w rises and the fourth increase in five weeks, to the index level of 281.6, the highest since the April 4 week. Applications for loans to purchase a house advanced 9.4% (25.4% y/y) in the July 4 week following a 0.1% uptick in the June 27 week and two successive w/w decreases. Applications for loan refinancing rose 9.2% (55.8% y/y) in the July 4 week, up for the fourth week in five, after a 6.5% rise in the previous week.

The effective interest rate on a 30-year fixed-rate loan declined 2bps to 6.95% in the week ending July 4 after falling to 6.97% in the week ending June 27; it was up from a low of 6.29% in the September 20 week but down from a peak of 8.12% in the week of October 20, 2023. The rate on 15-year fixed-rate mortgages fell 3bps to 6.20% in the July 4 week after declining to 6.23% in the previous week; it was up from a low of 5.60% in the September 20 week but down from a high of 7.44% in the week of October 27, 2023. The rate on 30-year jumbo loans eased to 6.88% in the July 4 week after dropping 16bps to 6.89% in the prior week; it was up from a low of 6.57% in the September 13 week but below a high of 7.99% in the week of October 27, 2023. These three rates mentioned were the lowest since their recent lows in the April 4 week. Meanwhile, the rate on a 5-year ARM rose 7bps to 6.28% in the July 4 week after decreasing 15bps to 6.21% in the previous week; it was above a low of 5.84% in the September 13 week but below a high of 7.31% in the week of October 27, 2023.

The share of applications for refinancing an existing loan fell to 40.0% of total applications in the week ending July 4 from an 11-week-high 40.1% in the week ending June 27, registering the first w/w fall since the May 23 week; those readings remained well below a peak of 55.7% in the September 20 week. The adjustable-rate mortgage (ARM) share of activity eased to 7.7% in the July 4 week, the third w/w decline in four weeks, after increasing to an eight-week-high 7.8% in the prior week; it was up from a low of 4.7% in the January 3 week but below its recent high of 9.6% in the April 11 week and a high of 10.7% in the week of October 27, 2023.

The average size of a mortgage loan, down for the third week in four, fell 1.3% w/w (+4.5% y/y) to $386,400 in the July 4 week following a 3.5% rebound to $391,500 in the June 27 week. The average size of a purchase loan, also down for the third week in four, fell 2.5% (+1.8% y/y) to $432,600 in the July 4 week, the lowest level since the January 17 week, after a 1.7% rise to $443,500 in the prior week. The average size of a loan to refinance a mortgage, up for the fourth week in five, rose 1.1% (18.8% y/y) to $317,100 in the July 4 week, the highest level since the May 2 week, on top of a 10.0% jump to $313,700 in the previous week.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

- Purchase applications +9.4% w/w; refinancing loan applications +9.2% w/w.
- Effective interest rate on 30-year fixed-rate loans falls to 6.95%, the lowest since the Apr. 4 week.
- Average loan size declines for the third time in four weeks. 

U.S. Mortgage Applications Advance 9.4% in the July 4 Week, the Third Straight W/W Rise

Andrew Cates

**Equity markets and growth surprises** 
Our first chart helps explain why global equity markets have remained buoyant in recent weeks despite some softer economic signals out of the US. The Citigroup surprise indices show that, on balance, global growth data have continued to surprise on the upside, while inflation readings have generally come in lower than expected. This combination—resilient global growth alongside moderating price pressures—has been supportive for risk assets. Investors appear to be drawing confidence from the prospect of a “soft landing” global backdrop: enough growth to support earnings but with cooling inflation that keeps central banks on track to ease policy further.

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**Global growth** 
This next chart underscores, through the respective June readings for global composite PMIs, how global growth has arguably held up better than expected in recent weeks, helping to sustain positive risk sentiment. India continues to lead with a strikingly strong reading for June, signalling robust economic expansion, while the US also remains firmly in growth territory. Notably, the UK and Japan both posted healthier readings above 50, pointing to steady, broad-based momentum. China’s reading is also comfortably above 50, suggesting some resilience despite lingering concerns. Meanwhile, the euro area is hovering just above the neutral 50 mark, indicating modest growth, while South Africa and Brazil continue to lag behind, with Brazil slipping just below the expansion threshold.

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**Global supply chain pressures** 
This next chart highlights one reason why global growth has so far proven more resilient than many expected: there is little sign at the global level of renewed supply chain stress despite recent shifts in US trade policy. The Federal Reserve Bank of New York’s global supply chain pressure Index remains broadly stable and well below the extreme levels seen during the pandemic, suggesting that supply bottlenecks are not (yet) driving significant upward pressure on global prices. This relative calm in global logistics implies that, for now, new or higher US tariffs have not materially disrupted global supply chains in the way some had feared, helping to support steady production flows and contain cost pressures—key ingredients behind the more stable global growth picture seen in recent months

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**Asia’s trade with the US** 
All that aside, Asia’s exports to the US have already begun to weaken—despite the ongoing tariff pause—and now face broader risks as new post-pause tariff rates are announced.US President Trump’s sector-specific tariffs are weighing on exports from key trading partners, particularly in Asia. For example, auto-export-heavy economies such as Japan and South Korea have seen their rolling 12-month exports to the US stagnate this year, as Trump’s 25% auto tariffs have taken a toll. In response, some producers have been forced to cut prices to absorb part of the tariff burden, squeezing their profit margins. More broadly, China’s exports to the US have plummeted this year amid escalating trade tensions. Although both countries recently agreed to roll back many previous tariff escalations, the agreement has not fully alleviated the uncertainty surrounding the bilateral trade environment—especially given that the rollback is only temporary.

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**China’s capital flows** 
China has also experienced a sustained trend of rising capital outflows in recent years, as illustrated in the chart below. This trend has continued into 2025, with rolling four-quarter total capital outflows exceeding half a trillion US dollars in the first quarter. The surge reflects a mix of investor motivations, including a growing desire to diversify assets abroad. A significant portion of these recent outflows has come from the acquisition of foreign portfolio investment assets, indicating an outward shift of capital into international financial markets. These outflows have contributed to downward pressure on the yuan, which has depreciated notably this year. However, the impact has been partially offset by concurrent weakness in the US dollar, amid recently subdued—yet still unresolved—US-China trade tensions. Despite ongoing currency pressures, Chinese authorities have moved to increase the foreign exchange quota for Qualified Domestic Institutional Investors (QDII), allowing greater investment in overseas securities, as depreciation pressure on the yuan has eased somewhat in recent months.

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**Renewable energy production** 
On a more positive note, this final chart shows the remarkable growth trajectory of global renewable energy production over the past two decades, which has accelerated sharply in recent years. Total renewable generation has climbed steadily to exceed 5,000 terawatt-hours, with China emerging as the dominant driver of this expansion. Europe and North America have also contributed significantly, while the rest of the world is adding to the momentum as emerging markets ramp up investment in cleaner power sources. This sustained surge reflects rising global commitments to decarbonisation and the transition away from fossil fuels, underpinned by technological advances and policy support. However, it’s important to note that despite this impressive growth in renewable supply, real energy costs for many consumers have continued to rise over the same period—highlighting the challenges of integrating renewables at scale, upgrading grids, and balancing supply with demand during the transition.

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_There will be no Charts of the Week publication for the next couple of weeks. The next edition will be released on Thursday, July 30th._

Recent buoyancy in global equity markets reflects a welcome mix of encouraging signals: growth is holding up better than many feared, inflation surprises have turned more benign, and most major central banks are poised to continue lowering interest rates in the period immediately ahead (charts 1, 2 and 3). There are, however, pockets of strain beneath the surface. Trade growth in Asia has slowed, most visibly in exports to the US, as tariffs and lingering tensions weigh on key sectors (chart 4). At the same time, China’s rising capital outflows point to firms and investors hedging their bets by shifting more assets abroad (chart 5). These undercurrents hint at an uneven global picture where trade frictions and capital shifts could test the durability of the recent calm. On a more positive note, the strong, steady climb in renewable energy production is a bright spot, underscoring the scale of investment pouring into the clean energy transition—even as real energy costs remain firm (chart 6). Altogether, while the broader backdrop remains supportive, new trade barriers, shifting capital flows, and the hidden costs of the green transition are watchpoints that could unsettle markets if growth momentum stalls or policy missteps occur.

Charts of the Week: Summer Resilience

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Consumer credit outstanding increased $5.1 billion (2.0% y/y) during May after rising $16.9 billion in April, revised from $17.9 billion, and $7.9 billion in March, revised from $8.6 billion. A $12.0 billion rise had been expected in the Action Economics Forecast Survey. As a percentage of disposable personal income, consumer credit of 22.5% in May compared to 22.3% in April and 22.9% one year earlier. It reached a high of 26.4% during all of 2017.

Nonrevolving credit outstanding rose $8.6 billion (1.8% y/y) during May after rising $9.4 billion in April, revised from $10.2 billion, and $6.0 billion in March, revised from $6.8 billion. Nonrevolving credit held by depository institutions declined 7.3% y/y in May after falling 7.5% y/y in April. Finance company debt holdings eased 0.2% y/y after increasing 0.4% y/y in April, while credit union holdings rose 10.8% y/y in May after a 10.4% y/y April jump. Nonrevolving debt of the federal government rose 4.0% y/y following a 3.6% y/y rise in April.

In May, revolving credit outstanding, which includes credit cards, declined $3.5 billion (+2.6% y/y) after a $7.5 billion gain in April, revised from $7.6 billion following a little-revised rise of $1.9 billion in March. Revolving credit outstanding held by depository institutions fell 2.9% y/y after declining 2.0% y/y in April. Revolving credit held by finance companies fell 10.9% y/y after an 11.6% y/y drop in April, while credit held by credit unions rose a steady 3.9% y/y in May.

The consumer credit figures from the Federal Reserve Board are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of data from the Census and the Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver’s **USECON** database. The Action Economics forecast figures are contained in the **AS1REPNA** database.

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- Consumer credit weakens more than expected.
- Nonrevolving credit usage eases as revolving credit declines.

U.S. Consumer Credit Slows in May

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The NFIB Small Business Optimism Index slipped 0.2% (+7.8%) to 98.6 in June after rising an unrevised 3.1% in May and falling 1.6% in April, according to the Small Business Economic Trends survey conducted by the National Federation of Independent Business. Six of the ten index components increased last month. The NFIB Small Business Uncertainty Index fell 5.3% (+8.5% y/y) to 89 after rising 2.2% in May. It was at the lowest level in six months.

The outlook for business conditions dropped in the latest survey. The net balance of respondents expecting the economy to improve stood at 22% last month versus 25% in May. A lessened 7% expected higher real sales in six months, compared to 10% in May. An increased 11% of respondents indicated that now was a good time to expand the business. The figure remained up from 4% last September.

Plans to make capital outlays eased to 21% of firms after rising to 22% in May. Plans to add to inventories were unchanged at -1% of survey respondents, and has been negative or zero all year. The index of expected credit conditions held steady with May at -4%. It remained up from a low of -11 in November 2023. On the labor front, the percent planning to increase employment edged up to 13% from 12% in May. The figure has trended near that level since March, but stands substantially below its high of 32% in August 2021. An increased 50% of businesses reported few or no qualified workers to fill job openings in June, up from a low of 46% last October. These readings remained below a high of 56% in August of last year.

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The net percent of firms reporting higher earnings rose to -22% last month after falling to -26% in May. The figure was increased from the August low of -37%. 

On the pricing front, the net percent raising their average selling prices rose to 29% last month from 25% in May. It had grown to 32% in February. The percentage planning to raise prices increased to 32% in June, up from a 24% low in July of 2024. Worker compensation rebounded as a net 33% of respondents lifted compensation during the last three months versus 26% in the last survey. Compensation gains peaked at 50% of firms in January 2022. A lessened net 19% of firms are making plans to raise worker compensation in the next three months, below November’s high of 28%.

Taxes were reported by an increased 19% of member firms as the single most important issue facing small businesses. These contrasted to a diminished 11% citing inflation as the most important problem. Other major concerns were the cost of labor reported by 10% of firms and government requirements, steady at 9%.

According to the Small Business Administration, there are 33 million small businesses in the United States, which employ 62 million workers. The NFIB surveys anywhere from 500 to 2000 respondents each month and the typical firm employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver’s **SURVEYS** database.

- Economic & sales expectations slip.
- Employment plans & job openings improve.
- Percent lifting prices and price expectations rise.

U.S. NFIB Small Business Optimism Index Dips in June

Robert Brusca

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The current and future economy watchers indexes advanced in June. In the current index, only services, housing, and employment readings weakened. In the future index, the reading for corporations weakened based on weakness for nonmanufacturing corporations. However, the improvement signaled is still quite downbeat since it only indicates that the ongoing deterioration is slower. The diffusion readings continue to be below 50, indicating pullbacks across all categories are still in train and are only letting up slightly.

While the improvements in the month-to-month readings were widespread, they were mostly small and no reading in either the current or the future survey has a diffusion value above 50%. That means that all these economy watcher readings are actually showing deterioration although on the month the rate of deterioration slowed across most category readings. In fact, there are no month-to-month readings at or above 50 in either the current or future survey in the last three months. To get a category reading of 50 or higher, we must go back to February when the reading for future employment was 50. We go back to August 2024 to find a majority of future sector reading at 50 or higher and to March 2024 to get a majority of current readings above 50.

The far-right hand column assesses the level of the June diffusion readings vs. past readings back to 2002. On that 23-year timeline, all the current and future readings have percentile standings below the 50% mark leaving all of them below their respective median readings for the period.

In the current survey, retailing and nonmanufacturers with diffusion percentile standings in their respective 41st percentiles have the strongest queue readings. The weakest reading in the current survey are the 21st percentile standings for housing and for employment.

For the future survey percentile readings, the strongest is a 45.5 percentile standing for eating and drinking places. The weakest future reading is the 24.5 percentile reading for employment.

Seeing such weakness in the current and future indexes in employment a reading that is a lynchpin for all sectors is clearly not reassuring.

At the bottom of the table, there are collected results for monthly data on month-to-month changes on the breadth of improvement. We see monthly that after a poor performance in April with most reporting categories worsening, May and June show most of them improving month-to-month on the order of 70% to 100%. Similar metrics for three-month and six-month changes perform much worse. These calculations are executed on changes in averages the twelve-month and average six-month and average 3-month data. On those comparisons, we see average diffusion is up broadly over 12 months compared to 12-months earlier. But the averages over six months and over three months are showing declines across all categories.

While the monthly data are showing some month-to-month improvement, the broader data show that the pace of improvement linked to broad averages is still not in place. And it is still a nefarious since of ‘improvement’ for the overall readings in which the diffusion data are only signaling that the categories are getting worse at a slower pace. Japan continues to struggle with weakness as the Bank of Japan wrestles with inflation and the United States and Japan spar over tariffs.

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Japan

Japan’s Economy Watchers Reading Is Increasingly Narrow Range

Tian Yong Woon

This week, we look at the latest US trade developments and their implications for Asia, as President Trump unveiled new tariff rates on 14 countries (chart 1). Though some rates were lower and implementation delayed to August 1, the move signals the US tariff pause is ending and deepens investor uncertainty in Asia. Market sentiment has weakened, reflecting both renewed policy risks and stalled trade negotiations in the region (chart 2). 

Vietnam stands out as a rare exception, having secured a deal with the US that reduced its tariff rate from 46% to 20%. However, the agreement includes a 40% tariff on “transshipments,” aimed at curbing indirect exports from third countries, such as China. In return, the US has gained tariff-free access to Vietnamese markets—an offsetting benefit for American firms. Nonetheless, the 20% rate remains high and could raise costs for US consumers if passed through supply chains (chart 3). Japan, by contrast, faces a more delicate balancing act. A 25% tariff was confirmed, while pressure persists over access for US agricultural exports—particularly rice (chart 4). Domestic sensitivities remain elevated amid a rice shortage and looming upper house elections, limiting Tokyo’s room to manoeuvre. 

Regional central banks are responding cautiously. The Reserve Bank of Australia held rates steady, defying expectations of a cut and citing a need for more information (chart 5). Rate decisions from South Korea, New Zealand, and Malaysia are due this week, with South Korea’s central bank seen likely to hold, amid rising home prices and mortgage growth (chart 6).

**Latest US tariff developments**
As previously signalled, US President Trump on Monday unveiled a new round of tariff rates targeting 14 countries, confirming initial fears that the US would move forward with reciprocal tariffs following its 90-day pause. While investor concerns—renewed late last week—have begun to materialize, there are two modest sources of relief. First, as shown in chart 1, many of the newly announced US tariff rates are actually lower than those initially unveiled on “Liberation Day,” April 2. Second, President Trump has delayed the effective date of the tariffs to August 1, offering a temporary window for countries that have not yet done so to negotiate trade deals with the US. However, while the extension allows more time for dialogue, it does not constitute a formal delay in implementation—at least for now. That said, progress in trade negotiations with the US remains limited across most Asian economies. In some cases, such as Japan, talks may have even come to an impasse—this will be explored further in subsequent sections. Vietnam, however, stands out as an exception, having secured a trade agreement with the US late last week; this development will also be discussed in more detail later on.

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Understandably, the earlier sense of relief—when tariffs appeared to have been delayed—has faded, giving way to renewed uncertainty. As this shift in sentiment takes hold, equity performance across advanced Asia has weakened slightly in recent days, as shown in chart 2. This likely reflects not only rising investor caution but also the lack of substantial progress in trade talks with the US, which contributed to the unveiling of tariff rates on Monday—unlike the more favourable treatment seen in Vietnam’s case. Looking ahead, investors focused on Asia will turn their attention to several country-specific trade discussions with the US for further cues. Growth and inflation outlooks are also likely to be revised, as not only first-round but also second- and subsequent-round effects of the tariffs are increasingly factored in. Another noteworthy development is US Treasury Secretary Bessent’s recent statement that around 100 economies and territories will now face a baseline tariff of 10%. If accurate—and if the 10% rate holds as the minimum—it suggests that many of the roughly 20 or more economies originally assigned that baseline rate have now been excluded. In effect, their relative trade position has worsened. In the Asia-Pacific region, key economies to watch in this context include Australia, New Zealand, and Singapore. 

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**Vietnam**
While trade deals with the US have been few and far between since the beginning of the tariff pause, Vietnam has stood out following the announcement of a new trade agreement with the US late last week. Originally facing a reciprocal tariff rate of 46%, Vietnam has reached a deal to reduce that rate to 20%. However, the agreement also includes a 40% tariff on so-called “transshipments”—a measure aimed at addressing US concerns that goods may be routed through Vietnam from other economies, possibly China, to circumvent higher tariffs or trade restrictions. In return, the US has secured tariff-free access to Vietnamese markets. While the 20% rate is a significant improvement over the initially proposed 46%, it remains relatively high—especially compared to the 10% reprieve level. This will likely translate into higher costs for American consumers unless the increase is absorbed by producers or suppliers. On the positive side, tariff-free access to Vietnam offers some offset, particularly for US input goods sent to Vietnam for further processing, which would avoid additional tariffs on that leg of trade. That said, there is still uncertainty around how the “transshipment” clause will be defined and enforced in practice. Given Vietnam’s role as a major supplier of electronics—including smartphones—to the US (chart 3), the increase from the 10% pause rate to 20% is significant. If the added costs are passed through the supply chain, it could lead to a noticeable impact on US consumer prices.

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**Japan**
Turning to Japan, the country is delicately balancing two competing pressures: minimising the economic fallout of renewed US tariffs while resisting trade concessions that could be seen as damaging to its domestic interests. A key sticking point is Washington’s push for greater access to Japan’s agricultural market—particularly for US rice. President Trump has criticized Japan as “spoiled” for resisting such demands and previously threatened tariffs of 30–35%. On Monday, however, a 25% tariff on Japanese goods was announced—slightly above the 24% rate first unveiled on “Liberation Day,” April 2. Meeting US demands would carry significant political risks for the Japanese government. Any perceived concession on rice would likely spark backlash from Japanese farmers, a core constituency of Prime Minister Ishiba’s political base. The issue is especially sensitive with upper house elections on the horizon. Complicating matters further, Japan is currently facing a domestic rice shortage that has been driving up prices. Given rice’s central role in the Japanese diet, the shortage is a growing cost-of-living concern. In response, Japan has already ramped up rice imports, as shown in chart 4, including by moving forward a tariff-free tender—originally scheduled for September—for 30,000 tons from the US, Australia, and Thailand. However, compared to Japan’s overall consumption needs, this added supply is little more than a drop in the bucket.

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**Central bank decisions this week**
This week’s renewed US trade uncertainty threatens to complicate a busy calendar of central bank decisions across the region. First among the major announcements was the Reserve Bank of Australia (RBA), which defied consensus expectations by leaving its policy rate unchanged, rather than delivering the widely anticipated 25 bps cut. While the RBA acknowledged significantly cooled inflation—as shown in chart 5—it also pointed to a still-tight labour market and market sentiment suggesting that the most extreme US trade scenarios are likely to be avoided. Citing the need for more information before considering its next steps, the RBA opted to maintain its policy rate at 3.85% following its July meeting. Other key central banks set to announce decisions this week include those of New Zealand, South Korea, and Malaysia—the latter two of which are facing 25% US tariffs starting August 1, absent a trade agreement, as announced by President Trump on Monday.

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Lastly, turning to South Korea, the central bank (BoK) has already lowered rates four times since beginning its easing cycle last October and maintained a dovish tone at its most recent meeting in response to weakening growth momentum. However, the BoK is widely expected to hold rates steady this week. It is aiming to strike a balance between supporting growth—particularly with the potential reinstatement of US tariffs looming—and avoiding overheating in segments of the domestic economy. In particular, the BoK remains concerned about the property market, where housing prices have resumed their upward trend, and the household loan sector—especially mortgage lending—where loan growth has once again accelerated, as shown in chart 6.

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Asia

Economic Letter from Asia: The Final Countdown?

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) jumped 2.3% (0.2% y/y) during the four weeks ended July 4, 2025. The improvement followed declines since early spring.

Prices in the Metals group surged 4.0% (-2.3% y/y) over the most recent four weeks. Price strength was broad-based. Tin prices jumped 7.9% (2.2% y/y) while aluminum costs surged 5.6% (4.2% y/y). Copper scrap prices rose 3.8% (5.0% y/y) in four weeks as lead prices surged 3.4% in four weeks (-7.4% y/y). The cost zinc rose 3.0% (-6.0% y/y) and steel scrap rose 1.4% (-11.4% y/) in four weeks.

Crude Oil & Benzene group prices moved 3.1% higher (-15.7% y/y) in the latest four week period. The cost of West Texas Intermediate crude oil rose 5.2% higher to $65.86 per barrel and remained 20.6% lower y/y. It fell to a low of $58.50 per barrel in the second week of May. The cost of the petrol-chemical benzene, used for making plastics & synthetic fibers, strengthened 6.0% (-35.3% y/y). Excluding crude oil, the industrial commodity price index rose 2.1% (1.6% y/y) during the last four weeks.

Miscellaneous group prices increased 1.5% (9.8% y/y) in the latest period. The price of tallow (used in the soap industry) rose 5.9% (15.7% y/y) in four weeks. Framing lumber prices gained 4.3% (38.3% y/y) while natural rubber prices improved 0.3% (12.5% y/y) in four weeks.


Prices in the Textile group edged 0.8% higher (1.7% y/y) during the last four weeks. Cotton prices rose 4.4% and also 4.4% y/y. Burlap costs rose 1.3% in four weeks and 10.1% y/y.

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

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- Prices increase broadly after earlier declines.
- Metals prices lead upturn.
- Textile price rise but rubber prices are little changed.

FIBER: Industrial Commodity Prices Surge in Latest Four Weeks

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The **Industrial Materials Price Index** from the Foundation for International Business and Economic Research (FIBER) increased 1.6% (0.4% y/y) during the last four-week period after rising 2.3% in the prior four weeks.

Prices in the **Metals** group jumped 2.9% (-3.4% y/y) over the most recent four weeks. Price strength was broad-based. Aluminum prices rose 4.3% in four weeks (5.1% y/y) while lead prices also gained 4.3% (-5.9% y/y). Since mid-June, tin prices increased 3.0% (-2.7% y/y) while the cost a zinc rose 2.9% (-7.2% y/y). Steel scrap costs gained 2.4% (-11.1% y/y) over four weeks while copper scrap prices rose 0.9% (1.4% y/y).

**Crude Oil & Benzene** group prices moved 1.9% higher (-14.3% y/y) in the latest four week period. The cost of West Texas Intermediate crude oil rose 2.2% to $67.65 per barrel but remained 17.8% lower y/y. It fell to a low of $58.50 per barrel in the second week of May. The cost of the petrol-chemical benzene, used for making plastics & synthetic fibers, strengthened 5.6% (-34.2% y/y). Excluding crude oil, the industrial commodity price index rose 1.5% (1.6% y/y) during the last four weeks.

**Miscellaneous** group prices increased 1.3% (10.6% y/y) in the latest four week period. The price of tallow (used in the soap industry) rose 7.8% (15.7% y/y) in four weeks. Framing lumber prices gained 5.4% (37.2% y/y) but natural rubber prices fell 2.9% (+19.0% y/y) in four weeks.

Prices in the **Textile** group edged 0.3% higher (1.9% y/y) during the last four weeks. Cotton prices rose 1.7% in that same period and 5.5% y/y. Burlap costs improved 0.7% in four weeks and 10.0% y/y.

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

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- Prices increase broadly after earlier declines.
- Metals price strength is accompanied by higher oil costs.
- Lumber prices surge but natural rubber prices decline.

FIBER: Industrial Commodity Prices Strengthen in Latest Four Weeks

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