MNI ASIA PAC Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• Japan’s Q4 capex beat bodes well for Q4 GDP revisions. Coupled with firmer external growth suggests economic growth should start 2026 in reasonable shape. Still, the oil price spike this week has cast a shadow over the inflation and growth outlook. Offshore investors continue to be strong buyers of local bonds, which could be a dominant theme in 2026. 

AUSTRALIA 

• The RBA maintained a hawkish backdrop this week, with Governor Bullock noting that every meeting is live. Q4 GDP was firmer than forecast, although household consumption spending moderated (we also saw the January print for household spending ease). Still, given elevated inflation/low unemployment rate, this may not be enough to derail further rate hikes.  

NEW ZEALAND

• New Zealand data was slightly softer than expected this week in terms of the dip in Q4 volume of building work done. Jobs filled rose for Jan, but the stop/start nature of the labour market recovery continues. The updates around NZ external prices/terms of trade were strong. The NZD looks too low relative to such trends but some offset is coming from broader risk aversion amidst the oil price spike.  

SHORT TERM RATES 

• Over the past week, interest-rate expectations across the $-bloc through December 2026 have firmed sharply in response to the Middle East conflict and its impact on oil prices, with moves led by the US (+19bps), followed by New Zealand (+16bps), Canada (+15bps) and Australia (+9bps).

CHINA 

• The China NPC saw the growth target for 2026 nudged lower, but with fiscal policy expected to remain a key support for growth we still see risks of a RRR cut to support broader liquidity. The yuan has outperformed so far this week amid the negative terms of trade shock from higher oil prices and global risk off. 

SOUTH KOREA

• South Korean data was close to expectations. Volatility was notably higher in the equity and FX space, while local bond yields are climbing on oil price spill over risks. 

ASIA 

• Activity data was solid via PMI prints, while BNM held rates steady as expected. FX markets were under pressure from the oil price spike, albeit with varying impacts across the region. 

ASIA EQUITY FLOWS 

• The spike in oil prices looms large over Asia Pac equities, with fairly strong net outflows seen over the past week by offshore investors. Some dip buyers emerged for South Korea though.