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EnglishپارسیEnglishپارسیJapan’s Corporate Services Price Index (CSPI) stayed unchanged, suggesting services-side price pressure remains sticky but not accelerating.
Source: Bank of Japan (CSPI)
Japan’s February PMIs (prelim.) stayed firmly in expansion, pointing to steady growth momentum. Services PMI edged up to 53.8 (prior 53.7), while the Composite PMI rose to 53.8 (prior 53.1). The standout was manufacturing: Manufacturing PMI jumped to 52.8 (forecast 51.3; prior 51.5), signaling a stronger factory rebound.
Source: S&P Global (Japan PMIs, preliminary).
Japan’s inflation picture softened in January. National Core CPI (YoY) came in at 2.0% (in line with expectations; prior 2.4%). Headline inflation also eased with National CPI (YoY) at 1.5% (prior 2.1%). On the month, National CPI (MoM) was -0.2%, while CPI n.s.a. (MoM) printed -0.1% (prior -0.2%).
Market lens: Cooling CPI can complicate the “fast-hike” narrative for the BOJ unless wages and underlying services inflation re-accelerate.
Source: Statistics Bureau of Japan (MIC).
A majority of economists polled by Reuters expect the Bank of Japan to raise its key policy rate to 1% by end-June, with some forecasting a move as soon as April amid rising inflation concerns and a weak yen. The consensus timing for the next hike has shifted earlier to end-June from end-September, marking a notable hawkish repricing after Prime Minister Sanae Takaichi’s landslide election win on Feb. 8.
The BOJ last raised rates in December to 0.75%—a 30-year high—and signaled it remained ready to keep tightening even as many global peers are near the end of rate-cut cycles. Markets are now watching whether Takaichi renews pressure on the BOJ to keep rates low, a political variable that could shape expectations around the pace of normalization.
Source: Reuters.
International flows into Japan were mixed. Foreign investors were net sellers of Japanese bonds at -¥489.5B, deeper than the prior -¥359.5B. But equity flows were strongly positive: foreign investment in Japanese stocks surged to +¥1,424.2B, up from +¥591.4B.
Market lens: The pattern looks like risk-on rotation within Japan—reducing duration exposure while adding to equities—potentially supportive for equities and keeping JPY sensitivity tied to rates and global risk tone.
Japan’s December core machinery orders—a key proxy for business investment—surged. Orders rose +19.1% MoM (vs +5.1% expected; prior -11.0%) and +16.8% YoY (vs +3.9% expected; prior -6.4%).
Market lens: A strong capex signal can support the “firmer activity” narrative, potentially supportive for JPY if reinforced by wages and broader demand data.
Japan’s Reuters Tankan Index rose to 13 in February from 7, signaling a stronger business sentiment pulse.
Market lens: Improving sentiment can support the case for firmer activity, but markets will look for confirmation in hard data and wages.
Japan’s January trade data came in much stronger than expected on the flow side. The trade balance showed a smaller deficit of -¥1,152.7B versus -¥2,142.1B expected (prior +¥113.5B). Exports jumped 16.8% YoY (vs 12.0% expected; prior 5.1%), while imports fell -2.5% YoY (vs +3.0% expected; prior 5.2%). The adjusted trade balance swung to a surplus of ¥0.46T (vs -¥0.18T expected; prior -¥0.06T).
Market lens: Strong exports plus weaker imports can be supportive for JPY at the margin, though FX reaction still depends on rates and risk sentiment.
Japan’s Tertiary Industry Activity Index printed 8.40 for December, a sharp rebound from -2.50 previously—pointing to a strong turn in services-side momentum.
Market lens: A firmer services signal can feed into BoJ normalization debate, but markets will look for confirmation in broader consumption and wage trends.
Japan’s 5-year JGB auction cleared at 1.640%, essentially unchanged from 1.639%—suggesting stable demand and little change in mid-curve pricing.
Market lens: With the 5-year point steady, JPY focus stays on the BoJ path and broader global yield moves.
Japan’s December industry data sent a mixed signal: industrial production was essentially unchanged, while capacity utilization improved sharply—suggesting factories ran more intensively even as output growth stayed muted.
Market lens: Stabilizing output with a rebound in utilization can hint at early-cycle firming, but the broader trend still hinges on demand follow-through—especially exports and domestic consumption—keeping JPY sensitive to macro surprises and yields.
Japan’s Q4 GDP details showed a weak growth mix: headline growth was positive but well below expectations, with business spending and external demand failing to provide a lift, while the GDP price index stayed elevated.
Market lens: The combination of soft real activity (capex + demand) with still-firm price pressure keeps the BoJ path finely balanced—supportive for “policy normalization” arguments, but growth fragility can still limit how fast rate expectations reprice, leaving JPY sensitive to global yields and risk tone.