MNI Asia Pac Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• Tokyo CPI was above market expectations, with core-core sticky at 2.5%y/y, while services inflation edged up. Interesting trends continue to emerge in the weekly offshore flow data, with offshore investors continuing to buy Japan bonds, while local investors sell offshore bonds. We also looked at the risks that offshore investors become a bigger driver of JGB yields this year.

AUSTRALIA 

• Australian Jan monthly CPI data was a touch above market forecasts and showed few signs of slowing inflation pressures. Underlying measures of inflation remain above the top-end of the RBA’s 2-3% target band.

NEW ZEALAND

• NZ retail sales were firmer than forecast for Q4, consistent with recent better activity/spending outcomes. Confidence measures for the consumer and businesses continued to move off recent highs, but are still suggesting a firmer growth backdrop. 

SHORT TERM RATES 

• Over the past week, interest-rate expectations across the $-bloc through December 2026 were broadly unchanged, with the exception of Canada, where pricing firmed by 9bps.

CHINA 

• We saw a step up from the PBoC around aiming to curb one-way yuan appreciation pressures. The PBoC made it cheaper to short the yuan, while also vowing to keep the currency basically stable. Markets will also focus on the Two Sessions, with the NPC scheduled to open on March 5. Premier Li Qiang is expected to announce a GDP growth target of 4.5%-5% and a fiscal deficit ratio steady at 4% of GDP.

SOUTH KOREA

• The BoK kept rates on hold this week, as widely expected, but had a slightly dovish tilt in terms of the outlook. Data outcomes continue to point to a better growth backdrop, with the BoK nudging up its growth forecast for this year. 

ASIA 

• The BoT surprised markets and sell-side economists by cutting rates this week. Still, there isn’t much room left to ease policy further. 

ASIA EQUITY FLOWS 

• Taiwan equity inflows continue to outpace South Korea, where strong outflows were present through February. Thailand net inflows remained positive as the government and BoT look to boost domestic growth.