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First quarter data shows that household spending and business investment both rose quarter-on-quarter. In addition, the surge in exports provided stronger growth momentum than the much smaller increase in imports. However, economist Marcel Thieliant noted that despite widespread discussion of loose fiscal policy under Japanese Prime Minister Sanae Takaichi, government consumption slowed quarter-on-quarter. This highlights that the supplementary budget announced last November has had no substantial impact on government spending. Meanwhile, consumer confidence has dropped sharply, and the fuel price cap can only keep inflation moderate for a limited time. He added that even with a new supplementary budget to fund gasoline subsidies, this would, at best, merely stabilize consumer spending.

Data shows that in the past five years, when the US 10-year Treasury yield rose by 20 basis points or more in a single week, the MSCI Asia Pacific Index fell in 16 out of 19 weeks, with an average decline of 1.6%. Last week’s market performance continued this pattern. This trend reminds investors that Asia’s position in global equity portfolios remains vulnerable to the same pressures currently testing global stock markets. The surge in bond yields reflects market bets that war-driven oil price hikes will force central banks to raise interest rates, which could dampen economic growth.

Glonghui, May 19｜Overnight weakness in US chip stocks dragged down their South Korean counterparts, while government bond yields continued to climb. Currently, the yield on South Korea's 10-year government bond is consolidating near its highest level in more than two years, after rising nearly 30 basis points to 4.23% last week. Investors are closely watching the latest rounds of wage negotiations between Samsung management and labor unions. The MSCI Asia-Pacific Index once rose by 0.3%.