THAILAND: BoT Sees Significant Risks To Growth From Trade Policies

The chart below plots the Tankan results for manufacturing (the white line), along with non-manufacturing (or services, the green line) and y/y Japan real GDP growth. Manufacturing ticked lower but is just off recent highs. For the non-manufacturing index, we hit fresh highs back to the early 1990s. This is likely to give the authorities/BoJ some comfort around broader macro conditions, particularly with so much off uncertainty. 

• The manufacturing outlook was also better than forecast at +12 and only slightly sub Q4's +13 read. Still a BoJ official noted that most firms likely responded before the recent US auto tariff announcement (per RTRS). This tempers the resilient results to a degree.
• Smaller firm results were generally firmer than forecast, but non-manufacturing firms have much higher outright levels relative to manufacturing.
• On the capex side, the large all industry capex estimate at 3.1% was very close to forecasts but down from the prior +11.3% pace. This arguably won't be a huge surprise, with other indicators of capex coming off in recent months.  
• The second chart below takes this capex estimate and plots it against the total capex (ex software) series in y/y terms, which is the orange line on the chart.  

Fig 1: Tankan Sentiment & Japan GDP Growth  

Source: MNI - Market News/Bloomberg 

Fig 2: Japan Tankan Capex Intentions & Actual Capital Spending (ex Software) Y/Y

Source: MNI - Market News/Bloomberg 

TYM5 is 111-12, +0-05+ from closing levels in today's Asia-Pac session.

• According to MNI's technicals team, TYM5 remains well off the initial technical resistance of 111-22.5 (today's intraday high) -- next resistance above at 112-01 (High Mar 4 and a bull trigger).
• Cash US tsys are slightly cheaper in today’s Asia-Pac session after yesterday’s modest gains.
• Month/quarter-end rebalancing flow tempered Monday morning's risk-off support ahead of Wednesday's US tariff deadline.
• Little new from Fed speakers Williams and Barkin: "need an open mind how long tariff impacts last" Williams said, while "to cut rates, got to have confidence on inflation".
• From our latest US Treasury Deep Dive - the Treasury isn’t expected to raise the size of its coupon offerings until Q4 2025 at the earliest, with consensus on such a shift moving following the February refunding announcement to Nov 2025/early 2026, from Aug/Nov 2025 prior.

• MNI: AUSTRALIA FEB RETAIL SALES +0.2% M/M