JAPAN DATA: Offshore Inflows Continue Into Local Bonds & Stocks
Offshore investors continue to shift funds into both Japan bonds and equities, continuing recent trends. Year to date net inflows into Japan bonds are now over ¥7.6trln, while for equities we near ¥6.4trln, but we haven't had a negative week of net selling (in equities) since mid Dec 2025. Elevated yields may continue to be appealing to offshore investors in the JGB space, while local equities have dipped sharply since the end of last week (post the Iran conflict and oil price spike). This week's flow update should provide guidance on whether offshore investor sentiment has been shaken.
- The other noteworthy update from last week's flow update, was local Japan investors continuing to sell offshore bonds. Since the final week of 2025, cumulative net selling in this segment now stands at over ¥4trln.
- This is diverging somewhat from improved global bond returns, but such trends may indicate a preferred home bias from local investors.
- Local investors again purchased overseas stocks, albeit at a fairly modest pace.
Table 1: Japan Offshore Weekly Investment Flows
| Billion Yen | Week ending Feb 27 | Prior Week |
| Foreign Buying Japan Stocks | 973.9 | 399.7 |
| Foreign Buying Japan Bonds | 1365.1 | 1882.9 |
| Japan Buying Foreign Bonds | -673.1 | -1900.8 |
| Japan Buying Foreign Stocks | 100.7 | 405.2 |
Source: Bloomberg Finance L.P/MNI
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AUD: EUR/AUD-Back Challenging The 1.69-1.70 Support, A Hawkish RBA Today Crucial
The overnight range was 1.6947 - 1.7120, Asia is currently trading around 1.6950. The pair found good selling around its first resistance and reversed quickly from above the 1.7100 area. Risk seems to have found some firmer footing thanks to the big US ISM Manufacturing print overnight. The pair is once again looking to challenge the pivotal 1.69-1.70 support area, how hawkish the RBA is today will have a big say in whether it breaks this time. On the day, the first resistance is back toward the 1.7100-1.7150 area and then 1.7250-1.7300. The AUD bulls will be hoping for some clear direction from the RBA today and hopefully give it the nudge it needs to continue to outperform. A sustained break through this support potentially opens up a much deeper move lower.
- The EUR/AUD Average True Range(ATR) for the last 10 Trading days: 135 Points
Fig 1: EUR/AUD spot Weekly Chart
Source: MNI - Market News/Bloomberg Finance L.P
AUD: AUD/JPY - Chopping Around Within 106.50-108.50, Can It Break Higher ?
The AUD/JPY range overnight was 107.04 - 108.36, Asia is currently trading around 108.20. The pair is trading sideways in a very wide choppy 106.50-108.50 range. AUD/JPY is up in rarified air so some prudence is warranted up here, but for now the trend remains up. Risk seems to have found some firmer footing thanks to the big US ISM Manufacturing print overnight. On the day, watch to see if price can get the momentum it needs to break back above the 108.50-108.70 tops and then extend. The target is 109.50-110.00 and a break above there would potentially see another leg higher.
- The AUD/JPY Average True Range(ATR) for the last 10 Trading days: 116 Points
Fig 1: AUD/JPY spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
US STOCKS: S&P(ESH6)-Big ISM Beat Sees Stocks Reverse, Eyeing A Move Above 7050
The S&P(ESH6) overnight range was 6874.75 - 7017.25, SPX closed +0.54%, Asia is currently trading around 7015. The S&P looked to be potentially in some trouble as it tested its first support but a huge rebound in the US ISM manufacturing PMI saw it do a complete reversal from almost 1.3% down. Stocks continue to confound any who think it might be overdone up here. Even with clear smoke signals coming from the recent back and forth between Nvidia and OpenAI, as well as Oracle looking to raise another $50 to help finance AI projects while its stock and CDS plummet as a result. For the moment it's tough to argue with the price action as dip remains well supported. This morning futures have opened higher again, E-minis(S&P) +0.20%%, NQZ5 +0.40%. On the day, the first support is back toward the 6930-6960 area and then 6820-6870 as the market is again looking to make new highs and looking to potentially regain its upward momentum.
- MNI INTERVIEW: US Manufacturing Rebound Not Yet A Trend - ISM. U.S. manufacturing activity is still on shaky ground despite the first month of expansion in a year and a sharp rebound in new orders that could be temporary, Institute for Supply Management manufacturing chair Susan Spence told MNI.
- Ed Zitron on X: “Oracle needs to raise funding to complete the data centers so that OpenAI can raise funding to pay for the data centers. The annual revenue of AWS is like $110bn and the oAI/Oracle contract is $300bn over five years. How does OpenAI afford this/Oracle pay its debts?”
- Fejau on X: The economy is re-accelerating .” See Fig.1
- Lance Roberts on X: “Bears are all but extinct in the current market. Short interest in both SPY and QQQ are at extremely low levels.” See Fig.2
- The S&P 500 Index Average True Range(ATR) for the last 10 Trading days: 71 Points
Fig 1: ISM Manufacturing PMI
Source: MNI - Market News/@fejau_inc
Fig 1: Short Interest
Source: MNI - Market News/J.PMorgan/ISABELNET.com
