EconoTicker

• Foreign Bonds Buying: ¥817.2B (vs. ¥1,479.7B prior)
• Foreign Investments in Japanese Stocks: -¥1,747.5B (vs. -¥2,032.8B prior)

Market impact: Neutral for JPY, as bond inflows provided some support, but continued equity outflows underscored cautious investor sentiment toward Japan’s stock market.

Historical context: September’s weekly data showed the third consecutive week of equity outflows, while bond purchases slowed from the previous surge, reflecting a rebalancing of foreign portfolios.

• CPI Tokyo Ex-Food & Energy (YoY, Sep): +1.0% (vs. +1.5% prior)
• Tokyo Core CPI (YoY, Sep): +2.5% (vs. +2.8% prior, +2.5% expected)
• Tokyo CPI (YoY, Sep): +2.5% (vs. +2.5% prior)
• CPI Tokyo Ex-Food & Energy (MoM, Sep): -0.7% (vs. +0.4% prior)

Market impact: Negative for JPY, as cooling inflation reduces pressure on the BoJ to tighten policy.

Historical context: Tokyo inflation — a leading indicator for nationwide CPI — showed its sharpest underlying monthly decline in over three years, reinforcing the view that Japan’s price momentum is weakening after peaking in 2023.

• Corporate Services Price Index (YoY, Aug): +2.7% (vs. +2.9% prior, +2.6% expected)

Market impact: Neutral for JPY, as service inflation remains elevated but showed a slight moderation from July.

Historical context: Despite the dip, service price growth has stayed above 2% for over a year, highlighting persistent cost pressures in transportation, leasing, and professional services that feed into broader inflation dynamics.

• BoJ Core CPI (YoY): 2.0% (vs. 1.9% prior, 2.0% expected)

Market impact: Neutral for JPY, as inflation remains stable at the Bank of Japan’s target, reinforcing expectations of a cautious policy stance.

Historical context: The index has hovered around 2% for several months, reflecting moderate price pressures mainly from services and energy adjustments, keeping the BoJ in wait-and-see mode.

• au Jibun Bank Manufacturing PMI (Sep): 48.4 (vs. 49.5 prior, 49.7 expected)
• au Jibun Bank Services PMI (Sep): 53.0 (vs. 53.1 prior)
• Composite Manufacturing & Services PMI (Sep): 51.1 (vs. 52.0 prior)

Market impact: Negative for JPY, as deeper manufacturing contraction weighed on overall activity despite continued expansion in services.

Historical context: September’s composite PMI slipped to a four-month low, reflecting persistent weakness in factory output while services maintained modest growth.

• Foreign Bonds Buying: ¥1,478.5B (vs. ¥208.0B prior)
• Foreign Investments in Japanese Stocks: -¥2,034.0B (vs. +¥108.6B prior)

Market impact: Mixed for JPY — strong bond inflows are supportive, but heavy equity outflows highlight caution on Japan’s stock market, limiting overall capital support.

Historical context: This marks one of the largest weekly shifts in flows this year, with investors rotating out of equities into bonds amid global uncertainty and domestic policy watch.

• National CPI (YoY, Aug): +2.7% (vs. +3.1% prior)
• National Core CPI (YoY, Aug): +2.7% (vs. +2.7% prior, +3.1% expected)
• National CPI (MoM, Aug): +0.1% (unchanged)
• CPI n.s.a (MoM, Aug): +0.2% (unchanged)

Market impact: Neutral for JPY, as inflation held steady, easing slightly from earlier highs but still above the BoJ’s 2% target. Markets will watch if the slowdown tempers expectations for further policy tightening.

Historical context: Inflation has cooled from peaks above 4% in early 2023 but remains elevated compared to Japan’s long history of sub-2% price growth.

• BoJ Interest Rate Decision: 0.50% (unchanged, in line with expectations), as policymakers maintain a cautious stance amid mixed signals on inflation and growth.

Market impact: Neutral for JPY, as the hold was fully priced in. Markets now focus on forward guidance regarding potential tightening in 2026.

Historical context: The BoJ has kept its policy rate at 0.50% since early 2024, marking the first exit from negative rates but maintaining one of the lowest interest rates globally.

• Core Machinery Orders (MoM, Jul): -4.6% (vs. -1.8% prior, +3.0% expected)
• Core Machinery Orders (YoY, Jul): +4.9% (vs. +5.4% prior, +7.6% expected)

Market impact: Negative for JPY, as weak capital spending signals slowing business investment momentum, reinforcing concerns over Japan’s fragile recovery.

Historical context: The sharp monthly drop reverses gains earlier this year, with annual growth moderating from the strong double-digit pace seen in late 2023.

• Adjusted Trade Balance: -¥0.15T (vs. -¥0.37T prior, -¥0.29T expected)
• Trade Balance (Aug): -¥242.5B (vs. -¥513.6B prior, -¥118.4B expected)
• Exports (YoY, Aug): -0.1% (vs. -1.9% prior, -2.6% expected)
• Imports (YoY, Aug): -5.2% (vs. -4.2% prior, -7.4% expected)

Market impact: Mixed for JPY — narrowing deficits offer some relief, but weak exports and imports reflect sluggish global and domestic demand.

Historical context: Japan’s trade has remained in deficit through much of 2024–25, though the August shortfall is one of the smallest this year, hinting at tentative stabilization.

• Tertiary Industry Activity Index (Jul): +1.4% (vs. +3.9% prior), pointing to softer momentum in services.

Market impact: Slightly negative for JPY, as the slowdown highlights weaker domestic demand, tempering expectations of strong economic momentum.

Historical context: The index has cooled after its strongest gain in nearly a year in June, reflecting normalization in service-sector growth following earlier rebounds.

• Capacity Utilization (MoM, Jul): -1.1%, moderating from June’s -1.8%, but still signaling weaker factory usage.
• Industrial Production (MoM, Jul): -1.2%, better than forecasts (-1.6%) but reversing June’s +2.1%, showing renewed weakness in output.

Market impact: Slightly negative for JPY, as softer industrial activity underscores fragile momentum in Japan’s manufacturing sector.

Historical context: July marks the first monthly decline in production since April, highlighting the sector’s sensitivity to global demand shifts.