The modest acceleration suggests that inflationary pressures in Japan’s capital remain persistent, even as the pace of increase stays relatively contained. Investors and policymakers often view Tokyo’s CPI as an early indicator of nationwide price trends, so the April uptick may reinforce expectations that inflation is holding slightly above earlier levels rather than decisively easing.

The April reading compares the change in prices to April a year earlier, while the previous figure of 1.7% reflected March’s prices versus March a year ago. The slight deceleration suggests that core inflation in Tokyo remains contained, with price growth edging lower rather than accelerating.

For investors and policymakers, the softer pace in Tokyo’s core inflation may reinforce expectations that Japan’s overall price dynamics are stabilizing at relatively low levels, keeping attention focused on how sustained and broad-based any inflation momentum can become in the coming months.

Manufacturers increased purchases and rebuilt inventories for the first time in seven months, pointing to precautionary stockpiling. At the same time, output declined at the sharpest rate in 16 months, and new orders fell again, with export sales slipping for the first time in four months.

Employment contracted for a second consecutive month, while backlogs of work and stocks of finished goods continued to fall. Input costs rose at the fastest pace since March 2022, driven by higher fuel prices, and output price inflation accelerated to near-record levels. Business confidence deteriorated for a third straight month, reaching its lowest point since July 2024 amid ongoing geopolitical tensions and intensifying cost pressures.

Though the increase is marginal, the move from 51.0 to 51.3 suggests that conditions in the manufacturing sector are stabilising rather than weakening. The April 2026 data indicate that Australian manufacturers are maintaining growth momentum, but without signs of a strong acceleration in activity at this stage. Investors and policymakers will now watch coming months’ readings closely to gauge whether this steady expansion can be sustained or strengthened.

Investors were also cautious ahead of the release of Q1 2025 unemployment figures, after the jobless rate in Q4 2025 rose to its highest level since Q3 2015. Even so, the decline in the NZX 50 was limited by a strong rally on Wall Street overnight, driven largely by robust earnings from major technology companies.

Notable early decliners included Port of Tauranga (-1.2%), Meridian Energy (-0.5%), Auckland International Airport (-0.4%), Chorus (-0.3%), and Delegat Group (-0.3%). For the week, the index is on track to edge up 0.1%, its first weekly gain in three weeks.

The latest reading compares the change in March to February, while the previous 2.8% figure reflected the change in February relative to January. The move from growth to contraction suggests renewed caution in the construction sector, potentially reflecting shifting demand, financing conditions, or developer sentiment. Market participants and policymakers will now be watching incoming data to see whether March’s decline is a temporary pause or the start of a more persistent slowdown in building activity.

In the equity market, banks were among the main gainers, with Itaú up 2% and Bradesco advancing 1.2%. Utilities also rose, led by Eletrobras, which climbed 2.6%. Petrobras added 0.2%, supported by still-elevated oil prices, even after a pullback from recent peaks.

On the macroeconomic front, the unemployment rate came in at 6.1% in the rolling quarter ended March 2026, up from 5.8% in the previous period and broadly in line with expectations. Despite the uptick, it was the lowest jobless rate for this period in the historical series, which began in 2012.

The modest rise in reserve balances indicates that banks continue to hold substantial funds on deposit at the Federal Reserve, reflecting ongoing monetary policy settings and demand for safe, liquid assets. While the change is slight, the persistence of balances near the $3 trillion mark highlights the system’s sustained high level of reserves relative to pre-pandemic norms.

Market participants and analysts will be watching future updates to assess whether this incremental uptick develops into a more pronounced trend, potentially offering clues about shifts in bank funding behavior and the Federal Reserve’s balance sheet management strategy.

While the week-to-week change is relatively small, the latest figure confirms that quantitative tightening remains in place, with the Fed allowing a portion of maturing securities to roll off its books rather than be fully reinvested. Investors will be watching how this slow, steady decline in the balance sheet interacts with interest rate policy and broader financial conditions over the coming months.

The updated balance sheet level serves as a key barometer of the Fed’s policy stance and its tolerance for tighter financial conditions. Market participants are likely to parse upcoming Fed communications for any indication of whether this pace of balance sheet reduction will continue, slow, or eventually pause in response to evolving economic and inflation data in the United States.

Technology stocks delivered mixed results. Meta and Microsoft fell 7% and 4%, respectively, as investors weighed the earnings impact of heavy AI-related capital spending, while Alphabet surged 10% after its cloud division reported a record quarter. Intel logged its best month on record, supported by optimism around its forthcoming 18A chips and rising CPU demand from agentic AI applications. In healthcare, Eli Lilly climbed nearly 10% after raising its full-year profit guidance.

On the macroeconomic front, US GDP grew at a 2% annualized pace in the first quarter. Weekly initial jobless claims fell to their lowest level since 1969, underscoring continued labor-market strength, while PCE inflation accelerated, driven higher by an upswing in energy prices.

The sharp month-on-month widening of the deficit points to rising spending, weaker revenues, or a combination of both, though the released figures do not specify the underlying drivers. The move from -50.73 billion to -110.10 billion pesos in just one month highlights mounting pressure on Mexico’s public finances during the first quarter of 2026.

Investors and analysts will be watching subsequent releases closely to assess whether March’s numbers mark the beginning of a more persistent fiscal deterioration or a one-off swing in the public accounts. Further detail from upcoming budget and revenue reports will be key to understanding the sustainability of Mexico’s fiscal trajectory as the year progresses.

The decision to hold at 11.25% underscores policymakers’ cautious approach amid persistent price pressures and an uncertain global backdrop. By keeping borrowing costs elevated, the central bank is aiming to anchor inflation expectations and safeguard the peso, even as high rates weigh on domestic demand and credit growth.

With the benchmark rate now steady at 11.25% from May 2025 through at least late April 2026, markets are likely to focus on incoming inflation and growth data for clues on when the central bank might begin easing. For now, the message from policymakers appears clear: restrictive monetary conditions will remain in place until there is stronger evidence of sustained disinflation and macroeconomic resilience.

The downturn strengthened expectations that Banxico will extend its interest-rate cutting cycle this year. In March, the central bank unexpectedly lowered its benchmark rate despite clear signs of strong inflationary pressures, reducing foreign-exchange inflows from carry trades that had previously supported the peso.

“As rates had modestly declined the last few weeks, purchase demand has accelerated, with purchase applications now more than 20% above a year ago. It is clear that purchase demand continues to hold up as prospective buyers respond to both slightly lower rates and a greater supply of homes on the market than in recent years,” said Sam Khater, Freddie Mac’s chief economist.

Tech weakness was partly offset by standout gains elsewhere in the sector, with Alphabet jumping 8% on robust enterprise AI client wins and Qualcomm rallying 20%. At the same time, renewed strength in more traditional parts of the economy helped lift the Dow Jones Industrial Average by 600 points. Eli Lilly surged 9% after reporting strong results driven by its weight-loss drugs, and Caterpillar advanced 11% on better‑than‑expected earnings.

On the macro front, a fresh data batch supported the more hawkish voices at the Federal Reserve. US GDP grew at a 2% pace, core PCE inflation accelerated, and initial jobless claims fell to a 50‑year low—all reinforcing the case for a cautious stance on rate cuts.

Additional support for the loonie came from faster domestic wage growth. At the same time, data showed that Canada’s GDP was flat in March, indicating that elevated energy prices may have curbed overall spending.

The figures were consistent with the BoC’s decision to leave interest rates unchanged this week. The bank noted that inflation remains contained and that higher energy costs have not yet unsettled household inflation expectations, thereby reducing the urgency for a more restrictive policy stance.

The modest increase suggests a slight upward shift in short-term borrowing costs for the U.S. government, reflecting evolving market expectations for near-term interest rate conditions. While the move is incremental, the 8-week bill is closely watched as a gauge of very short-term risk-free rates and liquidity conditions in U.S. money markets.

Investors’ demand for these ultra-short maturities often tracks sentiment around Federal Reserve policy, cash management needs, and broader risk appetite. The higher stop-out yield indicates investors required marginally more compensation to hold short-term U.S. government debt at this auction than at the prior one.

While the 0.005 percentage point move is modest, such shifts in the 4-week bill are closely watched by money market participants, short-term investors, and corporate treasurers who rely on ultra-short-dated government securities for liquidity management. The new auction result suggests that funding costs at the front end remain stable but are no longer drifting lower, hinting at a market still attentive to the path of U.S. interest rates.

This slight uptick in the 4-week yield may also serve as a reference point for pricing a range of cash and cash-like instruments, including money market funds and short-term funding facilities that benchmark their returns to Treasury bill rates.