JAPAN DATA: Offshore Investors Sell Japan Equities For 8th Straight Week
Offshore investors continued to sell Japan stocks last week, see the table below. This marks the 8th straight week of outflows from the space. The recent recovery in local equity indices (form earlier March lows) has not aided offshore sentiment in terms of reducing outflow pressures. Cumulative outflows from this segment stand at over ¥5trln since the start of the year.
- We also saw offshore investors sell local bonds as well. This only unwound part of the prior week's inflows, which is likely to have reflected safe haven demand to a degree.
- In terms of Japan outbound flows, for bonds flows were negative for the 3rd straight week, but cumulative flows since the start of the year are still positive. Offshore investors bought offshore equities, but this only partially reversed the prior week's net selling. The trend in this space has also remained positive since the start of the year.
Table 1: Japan Weekly Offshore Investment Flows
| Billion Yen | Week ending Mar 21 | Prior Week |
| Foreign Buying Japan Stocks | -1206.0 | -1805.6 |
| Foreign Buying Japan Bonds | -1797.4 | 3395.3 |
| Japan Buying Foreign Bonds | -207.1 | -83.5 |
| Japan Buying Foreign Stocks | 272.1 | -752.5 |
Source: MNI - Market News/Bloomberg
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FOREX: USD Edges Higher, USD/JPY Back At 150.00
The early skew for the USD is higher against G10 currencies, continuing late trends from Monday's US session, where Trump said tariffs were progressing/moving forward against Canada and Mexico. The USD BBDXY index was last up a touch to 1288.00.
- Losses are not much beyond 0.10% at this stage. AUD/USD is down 0.10% to 0.6340/45, while NZD/USD is back under 0.5730. In Australia a weekly consumer sentiment reading (from ANZ) bounced post the RBA cut last week, but spending intensions didn't rise much.
- USD/JPY is trending back above 150.00, up close to 0.20%. We had a few moments ago services PPI data, which printed in line with market forecasts.
- EUUR/USD was last near 1.0460, while USD/CAD was just above 1.4270.
- US equity futures have opened little changed after Monday cash losses. US cash Tsy trading has resumed with modest falls continuing in yield terms, but losses are less than 1bps at this stage. The Fed's Goolsbee stating the central bank is in wait and see mode what Trump actually delivers on trade/tariffs and its impact on inflation. Goolsbee added the central bank needs clarity before it can go back to cutting rates (per RTRS).
- The data calendar has some second tier Japan data later, while RBA Assistant Governor Jones is doing a Fireside chat.
JAPAN DATA: Services PPI Above 3% Y/Y, But M/M Falls
The Japan services PPI edged up to 3.1%y/y in Jan. This was in line with market forecasts and compares to the revised 3.0% gain from Dec (which was originally reported as a 2.9% rise). The m/m shift was -0.5%, after a flat outcome in Dec.
- The chart below plots this services PPI, which is the white line on the chart and reading to rhs, against headline CPI (reading to the lhs, the orange line).
- The services PPI is very close to recent cycle highs and consistent with elevated headline inflation pressures, even if m/m services PPI readings have lost some momentum in recent months.
Fig 1: Japan Services PPI Versus Headline CPI Y/Y
Source: MNI - Market News/Bloomberg
MNI: JAPAN JAN SERVICES PPI +3.1% Y/Y; DEC REV +3.0%
- MNI: JAPAN JAN SERVICES PPI +3.1% Y/Y; DEC REV +3.0%
- JAPAN JAN SERVICES PPI -0.5% M/M: DEC UNREV +0.0%
