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Japan’s S&P Global Services PMI rose to 53.4 from 53.8, exceeding the forecast of 52.8, signaling continued expansion in the services sector. Meanwhile, the composite PMI came in at 53.0, above the forecast of 52.5 but slightly below the previous 53.9, indicating a modest loss of momentum across the broader economy despite ongoing growth.

Possible Market Effect:

Stable expansion in services supports the yen outlook modestly, though softer composite momentum may limit upside.

Source: S&P Global

Japan’s 10-year JGB auction cleared at 2.350%, up from 2.122% previously. The result indicates investors demanded a higher yield than in the prior auction, pointing to firmer long-end funding costs.

Possible Market Effect: A higher auction yield can support the view that long-dated Japanese rates remain under upward pressure, which may keep attention on broader bond-market normalization dynamics.

Source: Ministry of Finance Japan.

Japan’s cross-border flow data showed heavier net selling. Foreign investments in Japanese stocks came in at -4,448.1B, compared with -2,511.0B previously, while foreign bonds buying stood at -945.4B, versus -635.1B previously. The figures indicate that net foreign selling intensified in both Japanese equities and bonds compared with the prior reading.

Possible Market Effect: Larger net outflows can weigh on sentiment toward Japanese financial assets in the short term, especially if the trend persists across subsequent weeks.

Source: Ministry of Finance Japan.

Japan’s monetary base fell 11.6% year-on-year in March, compared with a -10.8% forecast and -10.6% previously. The data shows monetary-base contraction deepened more than expected, indicating a sharper year-on-year decline in base liquidity conditions.

Source: Bank of Japan.

Japan’s S&P Global Manufacturing PMI came in at 51.6 in March, matching the 51.6 forecast and rising from 51.4 previously. The reading indicates that manufacturing activity remained in expansion territory and improved slightly from the prior month. The data points to a stable but still positive factory backdrop at the end of the quarter.

Importance: Low

Possible Market Effect: A PMI holding above 50 can offer mild support to Japanese cyclical sentiment, though the market impact is likely limited because the result matched expectations.

Source: S&P Global.

Japan’s Tankan All Big Industry CAPEX growth slowed to 3.3% in Q1 from 12.6% previously. At the same time, Tankan All Small Industry CAPEX fell to -8.1% from 0.1%. The figures point to a clear loss of momentum in capital-expenditure plans, especially among smaller firms, suggesting business investment intentions became more cautious at the start of the year.

Importance: Medium

Possible Market Effect: Softer capex plans can limit optimism around Japan’s domestic investment cycle and may temper the positive signal from stronger large-firm sentiment.

Source: Bank of Japan (BOJ).

Japan’s Tankan Small Manufacturing Index held at 7, in line with the 7 forecast and up from 6 previously. The Tankan Small Non-Manufacturing Index rose to 16 from 15. At the same time, the Tankan Small Manufacturers Diffusion Index improved to 4 from 2, while the Tankan Small Non-Manufacturers Diffusion Index fell to 8 from 10. The data points to a mixed small-business picture, with manufacturing and headline non-manufacturing sentiment improving, but diffusion among small non-manufacturers weakening.

Importance: Medium

Source: Bank of Japan (BOJ).

Japan’s Tankan Large Manufacturers Index rose to 17 in Q1, above the 16 forecast and higher than 16 previously. The Tankan Large Non-Manufacturers Index increased to 36, beating the 33 forecast and improving from 34. The Tankan Big Manufacturing Outlook Index came in at 14, above the 13 forecast but below 15 previously, while the Tankan Large Non-Manufacturers Diffusion Index rose to 29, above both the 28 forecast and 28 previous reading. The overall message is that large firms, especially in services, remained relatively confident in Q1, even though manufacturers’ forward-looking sentiment softened slightly.

Importance: High

Possible Market Effect: Stronger-than-expected large-firm sentiment can support Japanese equities and may keep expectations for policy normalization alive, particularly as non-manufacturing confidence remains strong.

Source: Bank of Japan (BOJ).

Japan’s February construction and housing data sent a mixed signal. Construction orders surged 42.7% year-on-year, sharply above the previous 5.7%, pointing to a strong jump in incoming project demand. But housing starts fell 4.9% year-on-year, worse than the -4.5% forecast and down from -0.4% previously, showing that residential activity remained under pressure. The combination suggests non-residential or project-side demand improved strongly, while the housing segment stayed soft.

Importance: Low

Possible market effect: The sharp rise in construction orders can support sentiment toward Japanese construction and capital-goods names, but the weak housing-starts figure may limit enthusiasm by showing that residential demand is still fragile.

Source: Ministry of Land, Infrastructure, Transport and Tourism of Japan (MLIT), Construction Orders Statistics and Building Starts Statistics.

Japan’s latest 2-year JGB auction cleared at 1.370%, up from 1.244% previously, indicating a higher short-term funding yield for the government. The move suggests investors demanded somewhat more yield than before, in line with a market still sensitive to the Bank of Japan’s normalization path.

Importance: Low

Possible market effect: A firmer 2-year auction yield can modestly support the yen and keep short-end Japanese rates elevated, especially if markets continue to test the idea of further BOJ normalization.

Source: Ministry of Finance, Japan, Japanese Government Bonds auction results.

Japan’s retail sales fell 0.2% year-on-year in February, missing the 0.9% forecast and slowing from 1.8% previously. At the same time, the broader retail picture was uneven, with large-scale retail sales up 3.0% YoY but large retailers’ sales down 2.0% MoM, suggesting that household demand lost momentum even if some segments held up better than others. Reuters also described February retail sales as a sign of weakening consumption momentum.

Importance: Low

Possible market effect: Softer retail demand can modestly weigh on Japanese domestic-demand names and may reinforce the view that consumption is still not strong enough to absorb higher energy and import costs easily.

Source: Ministry of Economy, Trade and Industry (METI), Current Survey of Commerce.