RBNZ and Japanese trade balance to be the highlights of the week - BBH

In view of the analysts at BBH, there are two highlights from the Asia-Pacific in the week ahead which includes RBZN meet and Japan’s trade balance which will garner maximum investor’s attention.  

Key Quotes

“The Reserve Bank of New Zealand meets.  It is widely expected to keep rates on hold.  The most recent data warned that the economy slowed more than expected, but it will take more than that to get the RBNZ to consider cutting rates.”

“The other highlight is Japan’s trade balance.  The February trade balance always (without fail for more than 30 years) improves over January.  Although Japan exports around 15% of GDP (compared with over 40% for some European countries), the external sector plays an important role in capex plans and industrial output.”

“Japan had generally run trade deficits from early 2011 through early 2016.  However, Japan returned to surplus.  Although Japan reported a large deficit in January (over JPY1 trillion), seasonal factors were the main culprits, and it is expected to return to surplus.  There has been a strong improvement in Japan’s broader external measures, its current account.  Last year the average monthly surplus was JPY1.72 trillion, the highest since 2007.”

“At the same time that Japan’s external account has improved, Japanese investors have turned sour on foreign bonds.  In the last 18 weeks through March 10, Japan sold about JPY6.05 trillion (~$57 bln) of foreign bonds.  Consider that in the previous 18 weeks, Japanese investors bought JPY7.76 trillion of foreign bonds.”