JAPAN DATA: Q1 BSI Reading Eases, But Suggests Little Change To Outlook

The Q1 BSI large all industry measure was 4.4, versus 4.9 in Q4. For large manufacturing this printed at 3.8, from 4.7 in Q4. While a step down from the Q4 pace, these headline results don't suggest much shift in underlying business conditions. The chart below plots the large manufacturing outcome for BSI (the white line), versus the Tankan result for large manufacturing (the orange line). Results from the BSI survey for smaller firms was notably softer at -12.9, versus -3.7 for Q4. * Domestic economic conditions did pick up versus Q4 outcomes, although not for small or medium sized firms. Fig 1: Japan BSI Large Manufacturing & Tankan Large Manufacturers' Source: Bloomberg Finance L.P./MNI

AUSTRALIA DATA: Inflation Expectations Highest Since 2023

March Melbourne Institute consumer inflation expectations rose 0.2pp to 5.2%. The last time they hit this level was mid-2023 when the RBA was hiking rates. The series was likely impacted by the Iran-related increase in petrol prices but inflation expectations were rising before that with an already elevated 5.0% in February up from 4.7% in Q4 2025. The RBA meets early next week and faces a very difficult decision with the war in Iran meaning that its February inflation forecasts are likely to be exceeded but the rise in fuel prices imposing a tax on consumers and producers and therefore likely to weigh on growth. Another rate hike is possible if the Board assesses that there will be second-round effects from higher fuel prices.

JAPAN DATA: Surge Into Japan Bonds Cools, Equity Inflows Continue

The recent surge into Japan bonds, from offshore investors cooled last week, see the table below. The near 1trln in net selling was the largest weekly outflow since end Sep last year. Still, cumulative inflows since the start of the year remain strongly positive at just over 6.6trln. JGB yields mostly pushed higher last week, with rising oil prices raising global inflation fears. Benchmark yields remain well off mid-Jan highs though. Offshore investors continued to buy local stocks, but at a reduced pace compared to the prior week. Cumulative 2026 inflows into local stocks also remain strong. Japan equity sentiment has stabilized after dropping sharply in the first week of March. * In terms of Japan outbound flows, we did see some buying of overseas bonds, the first such flow in 5 weeks. Cumulative net selling in this space remains firm since late 2025. * Local investors also continued to buy overseas stocks, for the third straight week. Table 1: Japan Weekly Offshore Investment Flows -------------------------------------------------------------- Billion Yen Week ending Mar 6 Prior Week Foreign Buying Japan Stocks 385.5 973.9 Foreign Buying Japan Bonds -963.6 1365.1 Japan Buying Foreign Bonds 399.8 -673.1 Japan Buying Foreign Stocks 163.1 100.7 Source: Bloomberg Finance

US DATA: Regional Feds Eye Further Disinflation Progress In Breadth, Stickiness

Regional Feds' estimates of CPI inflation dispersion and stickiness in February largely pointed to a softening of pressures versus January, and continued disinflationary progress overall on a longer-term perspective. * The Atlanta Fed's sticky core CPI ex-shelter metric saw a pullback to 0.19% M/M from 0.53% in January, with the Y/Y down to 2.90% from 2.98% prior to mark the lowest since September 2021. The volatile six-month annualized rate however picked up to 3.69% from 3.1%, however, largely reflecting the large jump in January (this reading had been as low as 1.22% as recently as December though along with the overall CPI survey this will have been distorted by government shutdown-related data issues in Oct and Nov). * Meanwhile the Cleveland Fed's median CPI metric fell to a 3-month low 0.17% M/M after 0.19%, with the Y/Y rate down to 2.85% from 2.97%. Like the Atlanta Fed's sticky metric, this was the lowest since September 2021. * The 16% trimmed mean metric was less disinflationary, with the 0.23% M/M reading up from 0.19% prior but this still brought the Y/Y down to 2.67% after 2.72%, now the lowest since May 2021. * MNI's calculation of median core goods CPI inflation slowed notably to 0.06% M/M following a particularly strong 0.44% M/M for the median in January, in a move that had matched the previous post-tariff peak of 0.43% M/M back in June.