MNI Asia Pac Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• Markets digested the weekend election result, with Japan assets mostly rallying in response, supported by rhetoric around the fiscal/bond issuance outlook and further jawboning on FX markets. Data wise, real household earnings remained negative, while import prices continued to rise. If the yen rebound persists we could see imported inflation pressures moderate. USD/JPY remains above our simple fair value estimate. The yield curve is notably flatter.

AUSTRALIA  

• Australia survey data ticked down, more so for consumer sentiment. Household spending growth moderated but from a high level (in y/y terms). The RBA expects the labour market to remain tight in the near term. The cash rate outlook remains data dependent but the central bank vowed to do what it takes to get inflation back to target. 

NEW ZEALAND

• The PMI edged lower for January, but is still suggesting a firming growth backdrop. Inflation expectations are edging higher, but from a low base. This is unlikely to shift thinking around next week’s RBNZ outcome, but focus will likely be on when the tightening cycle is expected to kick off. 

SHORT TERM RATES 

• Interest-rate expectations across the $-bloc over the past week, looking out to December 2026, have been little changed.

CHINA 

• China inflation was below forecasts in Jan, but the PPI edged up in y/y terms (albeit still in negative territory). Calls for monetary support remain evident, while local yields have drifted lower. Home prices remain in decline in m/m terms. 

SOUTH KOREA 

• Rising short end yields aren’t going unnoticed by the authorities, but given bond issuance trends, 3yr yields may remain elevated. 

ASIA 

• Singapore upgraded its 2026 growth outlook, raising MAS tightening risks for 2026. Malaysian growth was also firm into end 2025. 

ASIA EQUITY FLOWS 

• Tech related plays saw a surge in net inflows ahead of the lunar new year next week. Taiwan was the standout. Thailand saw strong inflow momentum post the election result. as well.