Key Highlights

• President Trump is to deliver an update on the Iran conflict tonight.
• Asia-Pacific markets rebound as President Trump says Iran war could end in two weeks.
• Brent crude falls below $100/barrel on optimism over a resolution to the war.

Chart of the Day

Flows inconsistent among AAA alternatives to U.S. Treasurys

^{Source: BNY}

Even with the news regarding a potential withdrawal of U.S. troops, quarter-end did not see significant inflows into risk assets. The U.S. dollar is continuing to perform well, and judging by a gradual but clear decline in yields of late, flows are returning to Treasury markets in greater size. If there is a lack of interest in risk, then we should also explore the prospect of additional diversification into alternative havens.

Keeping overweight exposures in the U.S. dollar and U.S. Treasurys is already priced in, but the record of other liquid assets which ought to also be performing well has been patchy. We have identified several large markets that are supported by ratings and/or commodity/energy links, and their performance has not been consistent at all, even though some have seen periods of clear positivity.

For example, Bunds faced sales at the very start of the conflict, but performance has otherwise been very strong through March on a weekly smoothed basis. Even with higher yields, we do not see a meaningful impact on Germany’s fiscal position, and there have been very clear inflows into European duration to capture positive real yields. However, end-March saw a softening in interest, which also points to some rotation away from Bunds after a sustained period of inflows.

Canada is close to “super-AAA” status, offering ratings, liquidity and some exposure to the U.S., on top of improved terms of trade based on energy exports. At the beginning of March, there were some initial outflows amid general flows into the U.S. dollar, but Canadian government bonds have since performed very strongly.

Australia’s rate and energy profile is similar to Canada’s, but its performance has been far weaker. Compared with Germany and Canada, Australia government bonds (AGBs) were well bid initially but then eased off. Australian CAST flow never really got going either after the first few days of the war. Having seen significant inflows into AGBs and cash instruments in January and February, there was very little in the way of additional positive terms-of-trade elements to add to flows on the margin.

What's Changed?

The shift from warnings about escalation to talks about an end to the conflict in Iran has led full circle, producing a significant bounce in global equities, a rally in bonds, a weaker USD and lower oil prices. There is also economic support for a continuation of the trend as we embark on April and Q2, including better South Korean trade numbers, a stronger Japanese Tankan report and improved EU PMI data. The surveys suggest that the war has not yet hit growth, so much as driven up inflation fears. The world economy has proved more resilient than traders expected, but tonight’s speech by President Trump will be the clock-setting event for hopes over the next fortnight.

Oil: The 5.4% drop in oil prices from $100/barrel Brent is significant; however, stalling price action in the EU after Iran denied that talks are underway or that the Strait of Hormuz is about to be reopened sent prices higher again. The correlation to USD or stocks is softening a bit, as “cautious optimism” serving as more of a driver than the current conflict. The U.S. API weekly inventory report revealed a significant surprise 10.263 million barrel (mb) crude oil build, when a 1.3mb draw was expected. The SPR was drawn down by just 0.300mb last week: U.S. production fell to 13.657mb, but that is still 0.83mb/day more than in 2025. Gasoline inventories fell by 3.2mb but are 3% above average, while distillates fell by 1.04mb, staying 0.4% below their five-year average. Watch the EIA report to confirm oil supplies and U.S. production.

NATO and Trump: The U.K.’s Daily Telegraph has published an interview with President Trump reporting that he is “strongly considering pulling out of NATO.” The resistance of some EU nations to allowing U.S. use of bases and airspace for the war was a key driver behind the statement. The president’s ability to do so will depend on Congress, as there is a law preventing just such an action, and on the Supreme Court. The fallout from the war on EU/U.S. relations will be an area to watch, and defense spending another, while the war in Ukraine remains an ongoing issue.

Inflation: China’s PMI slowed as prices rose and U.K. PMI saw the biggest jump in costs since 1992, as price worries feed through to all the economic data. The recession/inflation risk balance has flipped today, and that is not because of energy prices, but stock prices and the hard economic data. The ECB’s Primos Dolenc has warned that the “adverse scenario” may now be the new baseline. Expect the risk-on mood in equities today to seesaw against bond yields at some point, even as they have continued to rally on hopes of energy shock relief.

Bottom line: There is too much economic data to come today to ignore as irrelevant to the current trend toward risk. The tentative Q2 risk-on pivot starts with the need for President Trump to confirm the geopolitical de-escalation tonight. Stocks and bonds will not be linked in the bounce higher for much longer, as the economic data make clear. FX markets merit some attention, with uneven demand for “secondary haven” currencies and relative‑value themes building in G10 and EM. Commodities remain the key swing factor: oil is still elevated but volatile with steep backwardation, while precious metals and gold narratives are diverging. The fortnight timeline harbors other risks for the world, given ongoing supply chain concerns that require a return to pre-war global shipping and trade in the strait in the same timeframe. 

What You Need to Know

President Trump will deliver a prime-time address on Wednesday to provide an important update on the Iran conflict. He anticipates the war ending in two to three weeks, claiming that U.S. objectives to degrade Iran’s military capabilities have largely been met. Trump emphasized that countries dependent on Middle Eastern oil must secure passage through the Strait of Hormuz themselves, as Iran has effectively closed it. While not ready to withdraw U.S. forces, he expects other nations to assist. The administration is considering ground force deployment and potential strikes on Iranian infrastructure, including oil facilities on Kharg Island, if peace talks fail. S&P Mini +0.39% to 6596, DXY -0.343% to 99.619, 10y UST -4.4bp to 4.273%.

President Trump has said he is “strongly considering” withdrawing the U.S. from NATO, criticizing the alliance as a “paper tiger” after members declined to support U.S. efforts in the Iran conflict. The remarks reflect growing frustration within the administration over allies’ reluctance to provide military support or access to bases, with officials indicating the relationship may be reassessed after the war. Trump also suggested broader changes, including a potential “pay-to-play” model for alliance participation and possible troop withdrawals from Europe. The comments come amid tensions over the Strait of Hormuz crisis and highlight a significant shift in U.S. defense posture toward Europe.

Asian equities have surged, with the MSCI Asia Pacific Index rising as much as 5.1%. They recorded their strongest gain in nearly a year, driven by optimism that the Iran conflict may conclude within weeks, following remarks by President Trump. Gains were led by markets in South Korea, Taiwan and Japan, with major technology firms including Taiwan Semiconductor Manufacturing, Samsung Electronics and SK Hynix contributing significantly to the advance. Despite the rally, the index remains about 9% below its February peak, reflecting lingering caution among investors. Oil prices remain elevated at near triple-digit levels, and uncertainty around the Strait of Hormuz persists, highlighting ongoing risks despite improved near-term sentiment. MSCI Asia -1.31% to 226, USD vs. APAC FX Index +0.11% to 105.4139, BBG AGG APAC Government High Grade USD -2.5bp to 4.755%.

Oil prices have fallen sharply, with Brent crude dropping below $100 and WTI near $97, as markets reacted to signals from President Trump that the Iran conflict could end within two to three weeks. The decline reflects improved short-term sentiment despite ongoing disruptions, including the effective closure of the Strait of Hormuz, which has constrained global crude and gas supplies and pushed U.S. gasoline prices above $4 per gallon. While traders are pricing in potential de-escalation, risks remain elevated given the damage to energy infrastructure and continued military deployments in the region. Uncertainty remains over negotiations with Iran and the timeline for restoring supply flows, leaving markets sensitive to further geopolitical developments. Brent -2.27% to 101.61, WTI -2.536% to 98.81, Omani crude +31.157% to 123.93, Dubai crude -1.508% to 109.782.

U.K. food inflation is expected to rise sharply from 3.3% currently to around 9-10% by the end of 2026, according to the Food and Drink Federation, reflecting significant energy and supply chain disruptions linked to the Iran war. The forecast has been revised up from 3.2% previously and would mark the largest shock since 2022, when food inflation reached 16.9% y/y. The sector faces rising input costs from higher fuel, transport and packaging prices, alongside disrupted exports and imports, with red diesel prices up 80% since the conflict began. While the outlook assumes a reopening of the Strait of Hormuz within weeks, prolonged disruption could push inflation even higher, particularly given the sector’s heavy reliance on energy and imports. FTSE 100 +1.32% to 10311, GBPUSD +0.431% to 1.3284, 10y gilt -9.9bp to 4.817%.

What We're Watching

U.S. March ADP employment change forecast to ease to 40k vs. 63k, with the focus on where jobs are being created.

U.S. February advance retail sales are expected to rise to 0.50% m/m vs. -0.20% m/m, while retail sales ex auto are expected to rise to 0.30% m/m vs. 0.00% m/m and retail sales ex auto and gas is expected to hold at 0.30% m/m vs. 0.30% m/m.

U.S. March final S&P Global Manufacturing PMI forecast at 52.4 vs. flash 52.4 and 41.6 in February.

U.S. March ISM Manufacturing forecast to hold at 52.4 vs. 52.4 with prices paid expected to rise to 73.8 vs. 70.5 and employment is expected at 49.0 vs. 48.8 prior.

U.S. January business inventories are expected to hold at 0.1% m/m vs. 0.10% m/m.

U.S. March Wards total vehicle sales are expected to rise to 15.85 million vs. 15.75 million.

Canada March S&P Global Manufacturing PMI is expected at 50.5 from 51.

Central bank speakers: St. Louis Fed President Alberto Musalem speaks on economy and monetary policy at the American Enterprise Institute.

U.S. Treasury sells $69bn in 17-week bills.

What iFlow is Showing Us

Mood: iFlow Mood has stabilized at -0.0623, driven by increased equity selling alongside a plateau in core sovereign bond demand.

FX: Outflows were concentrated in EUR, TRY, ZAR and SGD, while COP, HUF, NOK and PHP saw inflows. Within G10, USD, JPY and AUD were bought. In EM, CNY and INR faced selling pressure.

FI: Strong demand for major sovereign bonds (U.S., Eurozone, U.K., Japan), alongside inflows into Colombia, Mexico, China and Thailand. Selling was concentrated in Malaysian, Indian and Indonesian government bonds.

Equities: Broad-based outflows across G10, EMEA and APAC, led by Japan, Canada, South Korea, India and Türkiye. Selective inflows were seen in Australia, Norway, Peru and Poland.

Quotes of the Day

“In politics, there is no use looking beyond the next fortnight.” – Joseph Chamberlain

“Like all guests, after a fortnight, grief is best beyond the door.” – Sandra Cisneros

Economic Details

Eurozone manufacturing PMI rose to 51.6 in March from 50.8 in February, marking a 45-month high and signaling continued but modest expansion, supported by steady increases in output (52.0) and new orders. Export demand stabilized after a prolonged period of contraction, while backlogs of work rose for the first time in nearly four years. However, supply-side pressures intensified sharply, with supplier delivery times lengthening to the greatest extent in over three and a half years and input cost inflation surging to its highest level since October 2022. Firms increased their purchasing activity for the first time since mid-2022, while output prices rose at the fastest pace in three years. Despite ongoing growth, business confidence weakened to a five-month low amid heightened uncertainty. Euro Stoxx 50 +2.15% to 5689, EURUSD +0.364% to 1.1595, BBG AGG Euro Government High Grade EUR -2.3bp to 3.335%.

The euro area’s unemployment rate rose to 6.2% in February from 6.1% in January, while the EU rate remained flat at 5.9%. The total unemployment count reaching 10.9 million in the euro area and 13.1 million across the EU. On a m/m basis, unemployment increased by 93k in the euro area and 137k in the EU, while compared with a year earlier it was down by 124k and 18k, respectively. Youth unemployment stood at 14.9% in the euro area and 15.3% in the EU, broadly stable m/m, with 2.37 million unemployed young people in the euro area. The gender breakdown showed euro area unemployment at 6.4% for women and 6.0% for men.

Germany’s manufacturing PMI rose to 52.2 in March from 50.9 in February, marking the strongest improvement in operating conditions since May 2022. This was driven by solid increases in output and new orders, partly reflecting firms building inventories ahead of expected disruptions. However, input cost inflation surged to its highest level since October 2022, with the largest m/m increase on record, while supplier delivery times lengthened to the greatest extent since July 2022 amid supply chain disruptions linked to the Middle East conflict. Output prices also rose at the fastest pace in over three years. Despite stronger current activity, business expectations fell sharply to a four-month low, and employment continued to decline as firms faced rising costs and uncertainty. DAX +1.98% to 23129, EURUSD +0.364% to 1.1595, 10y Bund -5.4bp to 2.95%.

France’s manufacturing PMI was flat in March at 50.0, from 50.1 in February, signaling stagnant operating conditions as rising cost pressures and supply chain disruptions offset weakening demand. Output declined for the first time this year, while new orders fell at the fastest pace in five months, with export demand recording its sharpest contraction since July. Input cost inflation surged to its highest level since December 2022, driven by higher energy and raw material prices, while supplier delivery times lengthened to the greatest extent since January 2023. Business confidence weakened to a five-month low, and firms scaled back their purchasing activity and employment slightly amid subdued demand conditions. CAC 40 +1.77% to 7955, EURUSD +0.364% to 1.1595, 10y OAT -8.7bp to 3.636%.

Italy’s manufacturing PMI rose to 51.3 in March from 50.6 in February, marking the strongest improvement in operating conditions in over three years, although growth in output and new orders remained modest and softened vs. the previous month. Export demand increased slightly for the first time in four months, while firms continued to expand employment. Input cost inflation accelerated sharply to a three-and-a-half-year high, driven by higher energy, transport and raw material costs, and output prices rose accordingly. Supply chain conditions deteriorated significantly, with delivery times lengthening to the greatest extent since October 2022. In response, manufacturers increased their purchasing activity and inventories for the first time in over three years amid concerns over further disruptions. FTSE MIB +2.49% to 45414, EURUSD +0.364% to 1.1595, 10y BTP -10.4bp to 3.803%.

Italian employment fell by 0.1% m/m (-29k) in February, taking the employment rate down to 62.4%. Meanwhile unemployment rose by 2.7% m/m (+36k), with the unemployment rate increasing to 5.3% and youth unemployment declining to 17.6%. Inactivity remained stable at 33.9%. On a q/q basis, employment rose 0.1% (+20k), while the number of jobseekers was down 8.0% (-119k) and inactivity increased by 0.9% (+117k). Compared with a year earlier, employment increased slightly by 0.1% (+13k), driven by gains among women and older workers, while unemployment fell sharply by 14.1% (-223k) and inactivity rose by 2.1% (+259k), indicating a mixed labor market environment.

Spain’s manufacturing PMI for March fell to 48.7 from 50.0 in February, signaling a renewed contraction and the weakest reading since April 2025, as the Middle East conflict weighed heavily on the sector. Output shrank for a second consecutive month, with the pace of contraction the fastest since December 2023. New orders fell sharply, particularly in export markets, recording their worst performance since April. Employment decreased at the steepest rate since October 2023, and firms reduced their purchasing activity amid weaker demand. Input cost inflation accelerated to its highest level since late 2022, driven by rising energy and fuel prices, while supplier delivery times deteriorated markedly, reflecting heightened supply chain disruption and increased uncertainty. IBEX 35 +2.64% to 17415, EURUSD +0.364% to 1.1595, 10y Bono -7.9bp to 3.426%.

Dutch manufacturing saw its strongest inflationary pressures in over three years this March, driven by supply chain disruptions linked to the Middle East war. The Nevi Netherlands Manufacturing PMI rose to 52.0 (50.8 in February), indicating growth supported by increased export sales and new orders. Output growth was the fastest since November, led by investment goods. Input price inflation hit a 41-month high due to higher costs for metals, plastics, fuel, energy and wages, prompting the strongest selling price inflation in over three years. Employment fell slightly as firms hesitated to replace staff, and confidence weakened to below trend on geopolitical concerns. AEX +0.94% to 969, EURUSD +0.364% to 1.1595, 10y NGB -5.4bp to 3.087%.

U.K. manufacturing PMI fell to 51.0 in March from 51.7 in February, indicating continued but slower expansion, as output declined for the first time in six months amid rising supply chain disruptions and cost pressures linked to the Middle East conflict. Input price inflation surged to a 41-month high, in the sharpest m/m increase since 1992, while supplier delivery times lengthened to the greatest extent since mid-2022. Despite these pressures, new orders continued to rise for a fourth consecutive month, suggesting demand remained relatively resilient. However, employment contracted at the fastest pace since September 2025 and business confidence fell sharply to a six-month low, reflecting heightened uncertainty. FTSE 100 +1.32% to 10311, GBPUSD +0.431% to 1.3284, 10y gilt -9.9bp to 4.817%.

Switzerland’s manufacturing PMI for March rose to 53.3 from 47.4 in February, surpassing the 50-point threshold for the first time since December 2022. This was driven by stronger order books, which increased to 54.2, and modest gains in production. The improvement was partly linked to longer supplier delivery times, which rose sharply to 63.6, though this likely reflected supply chain disruptions rather than stronger demand. Input prices surged significantly, with the purchasing price index rising above 70, reflecting higher costs for energy, metals and intermediate goods. Employment declined further to 47.5, while inventories increased. Meanwhile, the services PMI rose to 57.2, indicating continued robust expansion in the services sector. SMI +1.43% to 12960, EURCHF -0.366% to 0.92031, 10y Swiss GB -2.2bp to 0.343%.

Switzerland’s SME manufacturing PMI rose to 55.0 in March from 53.5 in February, signaling a further improvement in business conditions driven by domestically oriented firms. The orders component increased to 59.4, while production remained at 55.0 and supplier delivery times rose to 55.4. However, employment eased to 50.2 and inventories declined to 50.4, indicating some softening in labor demand and stock building. Despite the stronger headline reading, the outlook remains fragile as geopolitical tensions linked to the Middle East conflict weigh on sentiment, with nearly 40% of firms expecting negative impacts on investment plans. Export-oriented firms also flagged currency strength and elevated energy costs as key constraints on activity going forward.

Swiss retail sales increased by 0.3% y/y in nominal terms (real terms: +1.1%) in February after adjusting for sales and calendar effects. Non-food retail rose 1.2% (real terms: +2.8%) while food, beverages and tobacco declined by 0.8% (real terms: -1.1%). Separately, January services turnover fell by 1.4% y/y on a working-day-adjusted basis, according to provisional data from the Federal Statistical Office. The divergence highlights stronger momentum in discretionary retail segments than for essential goods, while the contraction in services points to softer activity at the start of the year. Overall, the data indicate modest retail growth alongside a decline in services output in early 2026.

Sweden’s manufacturing PMI rose to 56.3 in March from 56.0 in February, remaining above its historical average for a ninth consecutive month and indicating a stronger average level in Q1 than in Q4 2025. The increase was driven primarily by supplier delivery times, followed by employment and inventories, while new orders made the largest negative contribution in 20 months. The index for raw material and input prices increased by 9.6 points m/m to 67.2, the highest level since October 2022. Despite overall resilience in industrial activity, declines in order intake and signs of supply disruptions were noted during the survey period, which ran from March 10-26. OMX +2.55% to 3004, EURSEK -0.523% to 10.8814, 10y Swedish GB -5.9bp to 2.819%.

Poland’s manufacturing PMI for March rose to 48.7 from 47.1 in February, indicating a slower pace of contraction but extending the downturn in business conditions to an eleventh consecutive month. Output increased for the first time since April 2025, although the expansion was modest and constrained by continued declines in new orders, which fell for a twelfth month despite easing slightly. Employment declined at the fastest pace since September 2023, while backlogs also contracted amid weaker demand. Input cost inflation accelerated sharply to its highest level since October 2022, driven by higher energy and commodity prices linked to the Middle East conflict, with output prices rising at the fastest rate since January 2023. WIG +1.66% to 124488, EURPLN -0.077% to 4.2851, 10y PGB -13.8bp to 5.741%.

Hungary’s manufacturing PMI fell to 50.4 in March from 51.2 in February, remaining marginally in expansion territory but marking a below-average reading and one of the weakest March outcomes on record. Output and new orders both slowed, with the production index declining by 2.3 points and new orders easing slightly, though both remained above 50. Employment contracted as the index fell below 50, while supplier delivery times also deteriorated sharply, dropping 4.9 points and signaling worsening supply conditions. Export and import indices both fell but remained in expansion territory. Input price pressures intensified significantly, with the purchasing price index rising by 9.5 points, while inventories of finished goods increased further, indicating stock accumulation amid fragile demand conditions. Budapest SI +2.29% to 124154, EURHUF -0.545% to 381.94, 10y HGB -11bp to 7.17%.

Czechia’s manufacturing PMI for March rose to 52.8 from 50.0 in February, signaling a return to expansion and the strongest improvement in operating conditions since April 2022. Output increased at the fastest pace since January 2022, supported by renewed growth in new orders and export demand, with sales rising at the quickest rate since February 2022. Despite stronger activity, employment declined for a third consecutive month due to cost pressures. Input price inflation accelerated to its highest level since October 2022, driven by higher energy and raw material costs, while supplier delivery times lengthened markedly amid supply disruptions. Firms increased purchasing activity and inventories in response to expected shortages, and business confidence strengthened to a four-year high. Prague SE +1.85% to 2556, EURCZK -0.115% to 24.518, 10y CZGB -5.5bp to 4.876%.

Türkiye’s manufacturing PMI fell to 47.9 in March from 49.3 in February, marking a five-month low and signaling continued contraction in business conditions, with the sector now weakening for two consecutive years. The decline was driven by sharper slowdowns in new orders and output, alongside weaker export demand, as inflationary pressures linked to the Middle East conflict dampened activity. Input costs and output prices rose at the fastest rates in 23 and 25 months, respectively, while supplier delivery times lengthened to the greatest extent since August 2024 amid supply disruptions. Firms reduced employment to a six-month low and scaled back purchasing activity and inventories, reflecting softer demand conditions. BI 100 +1.37% to 12966, USDTRY +0.039% to 44.476, 10y TGB -84bp to 32.7%.

South Africa’s Absa manufacturing PMI for March rose to 49.0 from 47.4 in February, remaining below the 50-point threshold and signaling continued contraction. The increase was driven mainly by a rise in supplier delivery times linked to supply chain disruptions, rather than by stronger demand. New sales orders remained weak, while input cost pressures surged sharply, with the purchasing price index jumping 20.7 points to 75.8, the highest level since early 2023 and the largest increase on record. The rise reflects higher oil prices and a weaker rand, with further fuel price increases expected to sustain elevated costs. Business confidence deteriorated significantly, with the expected business conditions index falling by 22.9 points, the steepest decline on record. JSE TOP 40 +1.48% to 107863, USDZAR -0.597% to 16.8402, 10y SAGB -11.9bp to 9.205%.

Japan’s Tankan survey improved in Q1, but conditions are expected to worsen in the next three months. Business conditions for large manufacturers improved in the three months to March, at a reading of 17 (Q4: 16), but are forecast to ease to 14 in Q2. An index gauging sentiment among large non-manufacturers stood at +36 in Q1, unchanged from December, but is forecast to drop to 29 in Q2. Overall, the Tankan survey for all enterprises was unchanged at 18 for Q1 but is expected to fall to 11 in Q2. Output prices are rising (Q1: 28 vs. Q4 2025: 26, Q2 forecast: 33), with input price increases accelerating (Q1: 46, Q4 2025: 40, Q2 forecast: 52) for large enterprises. Sales growth forecasts for FY 2026 are modest at 1.3% y/y (down from 2.3% in FY 2025), while current profits are expected to decrease by 2.4% y/y across all enterprises in 2026. Elsewhere, fixed investment growth is set to slow to 1.3% y/y in 2026 from 7.9% y/y in 2025. Employment conditions remain tight. Nikkei +5.24% to 53740, USDJPY +0.891% to 158.33, 10y JGB -4.9bp to 2.305%.

The Japanese manufacturing sector saw slower growth in output, new orders and employment in March than in February, with the S&P Global Manufacturing PMI easing from 53.0 to 51.6 (vs. flash estimate of 51.4). Factory output and new orders expanded modestly, driven by demand for semiconductors, AI technology and automotives. Employment rose at the slowest pace YTD, amid ongoing labor shortages. Input costs increased at the fastest rate in 19 months, influenced by the Middle East conflict, raw materials, energy and labor costs, and a weak yen. Business optimism softened but remained near the long-term average.

Australia’s final PMI for the manufacturing sector contracted for the first time in five months this March, falling to 49.8 (down from a flash estimate of 50.1 and 51.0 in February). New orders declined due to muted demand and reduced confidence, while new export orders rose sharply, the fastest since May 2021. Production decreased for the second consecutive month amid material shortages and supply delays linked to the Middle East conflict. Input costs surged at the steepest rate in 3.5 years, driven by higher oil, freight and fuel prices, leading to increased output price inflation. Employment and purchasing activity fell, and business confidence hit a 20-month low. ASX +0.55% to 5431, AUDUSD +1.227% to 0.6935, 10y ACGB -6.5bp to 4.909%.

Australia’s national home value index rose 0.7% in March, with a 2.1% m/m increase in Q1 (down from 2.8% in Q4 2025). Perth led growth, up 7.3% over the quarter, adding about $69,000 to median values, supported by low supply. Prices in Sydney and Melbourne have been on a downward trajectory since November 2025, down 0.4% and 0.9%, respectively, with Sydney’s upper-quartile values falling 1.8% while lower-quartile values rose 1.8%. Mid-sized capitals and regional markets showed resilience, with regional WA up 6.2% q/q. Housing demand is easing amid rising costs and geopolitical uncertainty, pointing to a potential further slowdown.

Australia’s total dwelling approvals rose 29.7% m/m in February to 19,022 (seasonally adjusted). This was driven by a 101.2% increase in private dwellings excluding houses, rallying from falls in January and December. Private sector house approvals edged up 0.2% m/m to 9,847, 6.1% higher y/y; New South Wales led with a 13.7% rise, while Queensland saw a 13.4% fall. Apartment approvals surged 191.2% m/m to 5,398, up 29.8% y/y, while townhouse approvals rose 73.8% m/m to 2,981. The total building approval value increased by 14.4% m/m to $20.43bn, led by a 30.8% rise in residential building value to a record $12.50bn.

New Zealand’s seasonally adjusted new dwelling consents rose 2.7% m/m in February (2.0% in January). The year ended February 2026 saw 37,534 new dwellings receive consent, up 12% y/y from the previous year. New dwellings per 1,000 residents increased to 7.1 from 6.3. By region, growth was notable in Auckland (+16%), Wellington (+18%) and Canterbury (+16%). Non-residential building consents reached NZ$8.9bn, up 0.7% y/y, with the highest values in offices/public transport ($1.9bn, +15%), education ($1.4bn, +23%) and factories ($1.3bn, +1.7%). NZX 50 -0.67% to 12826, NZDUSD +1.053% to 0.5763, 10y NZGB -11.3bp to 4.61%.

The New Zealand property market showed limited momentum in March. New listings rose just 0.2% y/y to 12,055 but fell 1.6% m/m, while the national average asking price increased marginally by 0.5% y/y to NZ$859,683, remaining broadly flat over recent years. Activity softened as higher fuel costs and geopolitical uncertainty weighed on seller behavior, although buyer interest remained resilient, with website traffic up 19.9% y/y. Regional trends were mixed, with strong listing growth in areas such as Gisborne (+19.2% y/y) and declines in Northland (-14.9% y/y) and the West Coast (-19.5% y/y). National housing stock rose 2.1% y/y to over 37,500 properties, though Southland saw a sharp 20.7% y/y decline.

China’s manufacturing sector continued to expand in March, with output, new orders and employment rising, though growth slowed from February (RatingDog PMI 50.8 vs. 52.1). Suppliers’ delivery times lengthened to the greatest extent since December 2022, reflecting supply chain disruptions and capacity constraints. Inflationary pressures intensified, with input and output price inflation reaching their highest levels since March 2022. Backlogs increased due to strong demand and capacity limits. Despite slower growth, sentiment remained positive, supported by customer demand, production investment, efficiency gains and government policies. New export orders grew but at a slower pace than in February. CSI 300 +1.7% to 4526, USDCNY +0.294% to 6.8742, 10y CGB +0.1bp to 1.817%.

South Korean exports reached a record $86.13bn in March, up 48.3% y/y (previous high: $69.5bn in December 2025), driven by a 151.4% surge in semiconductor shipments to $32.83bn amid strong AI data center demand. The March trade balance hit a new high of $25.74bn. Car exports rose 2.2% y/y to $6.37bn, supported by eco-friendly models. Petroleum product exports jumped 54.9% y/y to $5.1bn, despite government fuel export restrictions causing declines in gasoline and diesel shipments. By destination, there were increases in exports to China (+64% y/y to $16.5bn), the U.S. (+47.1% y/y to $16.34bn), ASEAN (+34.3% y/y to $13.75bn) and the EU (+19.3% y/y to $7.47bn), while Middle East-bound exports fell 49.1% y/y to $0.9bn due to the conflict in the region. KOSPI +8.44% to 5479, USDKRW +1.29% to 1500.1, 10y KTB -1.8bp to 3.877%.

South Korea’s manufacturing PMI for March 2026 rose to 52.6 from 51.1 in February, marking the steepest output increase in 19 months and the best improvement in over four years. Employment returned to growth after three months, with job creation at a six-month high. Input cost inflation accelerated to the fastest pace since June 2022, driven by higher oil and raw material prices, prompting the largest rise in output charges since July 2022. New orders grew for the fourth consecutive month, supported by domestic demand and new products, despite marginal foreign demand growth amid Middle East conflict and exchange rate volatility.

The ASEAN manufacturing sector’s PMI fell to 51.8 in March, the lowest figure in six months, down from February’s 53.8 and indicating slower growth in output and new orders. New export orders shrank, while purchasing and employment increased only marginally. Input price inflation surged to its highest since October 2022, driving output price inflation to a three-year peak. Despite the slowdown, the sector continued to expand for the ninth consecutive month. Business optimism for future production growth weakened to a four-month low but remained positive overall. MSCI Asia -1.31% to 226, USD vs. APAC FX Index +0.11% to 105.4139, BBG AGG APAC Government High Grade USD -2.5bp to 4.755%.

Singapore private residential property prices rose 0.3% q/q in Q1, slowing from a 0.6% increase in Q4 2025, according to the Urban Redevelopment Authority (URA). Landed property prices declined by 1.8% q/q, while non-landed property prices increased by 1.0% q/q. By region, prices rose by 0.4% q/q in the Core Central Region, by 0.9% in the Rest of Central Region and by 1.3% in the Outside Central Region. On a y/y basis, all residential prices were 2.8% higher in Q1, down from 3.3% growth in Q4. Total sales had reached 4,041 transactions by mid-March. STI +1.9% to 4979, USDSGD +0.64% to 1.283, 10y SGB -8.6bp to 2.29%.

Taiwan’s manufacturing sector expanded at a slower pace in March, with the PMI falling to 53.3 from February’s 55.2. Output, new orders and exports grew at softer but still solid rates, supported by demand from Europe, Japan, mainland China and the U.S. The Middle East war caused a sharp rise in input costs and worsened supplier delivery times to their worst reading since May 2022. Input costs rose at the second-steepest rate in nearly four years, pushing selling price inflation to its highest figure since June 2022. Employment declined slightly, while backlogs increased significantly. Despite challenges, firms remain optimistic about growth, especially in AI-related products. TAIEX +4.58% to 33175, USDTWD +0.025% to 31.972, 10y TGB +3.6bp to 1.525%.

Thai manufacturing PMI rose to 54.1 in March (from 53.5 in February), marking the strongest sector improvement since December 2025. New orders accelerated to a three-month high, driving sharp output growth despite a slight decline in factory employment for the second consecutive month. Backlogs increased as demand outpaced production capacity. Input stocks rose slightly amid longer supplier lead times and worsened vendor performance. Operating costs remained stable, with marginal price discounts continuing for the fourth month in a row. However, business confidence fell sharply to its lowest ebb since August 2021, weighed down by concerns over the Middle East war impacting demand and prices. SET +1.97% to 1477, USDTHB +1.4% to 32.515, 10y TGN -4.7bp to 2.234%.

Thailand’s Business Sentiment Index for March fell to 47.7, dropping below the 50-point threshold and signaling a deterioration in business conditions. This was driven largely by weakness in the non-manufacturing sector amid the impact of the Middle East conflict. The three-month expected BSI declined further to 44.2, falling below the current index for the first time since 2011, reflecting heightened concerns over a prolonged disruption. Sentiment weakened notably in hotels and restaurants due to cancellations and reduced tourism, while manufacturing was pressured by higher energy costs linked to the Strait of Hormuz disruption. Cost and order book components fell to 19-month lows, while inflation expectations rose to 2.5% from 2.1% and concerns over high production costs intensified.

Malaysia’s manufacturing PMI rose to 50.7 in March from 49.3 in February, signaling a return to expansion and the strongest improvement in operating conditions in nearly four years, driven by renewed growth in output and a slight increase in employment. However, demand remained weak, with new orders declining for a second consecutive month and export demand softening. Purchasing activity fell for the first time in nine months, while supply chain disruptions intensified, with delivery times lengthening sharply amid the impact of the Middle East conflict. Input cost inflation accelerated to its fastest pace since October 2024, and output prices rose at a 45-month high as firms passed on higher costs. Business confidence weakened to a seven-month low. KLCI +0.85% to 1705, USDMYR +0.652% to 4.0233, 10y MGB -2.4bp to 3.625%.

The Philippines’ manufacturing sector reported modest expansion in March, with the PMI easing to 51.3 from 54.6 in February, reflecting slower growth in output and new orders amid uncertainties relating to the Middle East war. New export orders declined for the first time since December, dampening overall demand. Purchasing activity stalled, ending a three-month growth streak, while vendor performance deteriorated due to higher gas, fuel and material costs. Input prices and factory gate charges surged sharply. Employment growth continued but at a slower pace. Despite challenges, manufacturers’ optimism rose to a four-month high, anticipating improved demand over the next year. PSEi +0.84% to 5999, USDPHP +0.973% to 60.16, 10y PHGB -13.8bp to 6.731%.

Indonesia’s manufacturing sector stagnated in March, with the S&P Global PMI at 50.1, down from 53.8 in February. Output and new orders fell, impacted by the Middle East war disrupting raw material supply and demand. Delivery delays were the longest since October 2021. Input cost inflation accelerated to a two-year high, driving the fastest rise in output prices since June 2022. Employment and purchasing activity fell slightly. Business confidence improved but remained below average, supported by hopes of demand recovery and no further escalation in the Middle East conflict. Backlogs decreased, while inventories rose due to unsold stock. JCI +1.72% to 7169, USDIDR +0.089% to 16980, 10y IDGB -11.2bp to 6.743%.

Indonesian CPI rose 3.48% y/y in March, with the index at 110.95, while inflation was 0.41% m/m and 0.94% YTD. Core inflation stood at 2.52% y/y and 0.13% m/m. Price pressures were broad-based, led by housing, water, electricity and household fuels (+7.24% y/y) and personal care and other services (+15.32% y/y), while most other categories recorded moderate increases, and information and communication prices fell slightly (-0.03% y/y). Elsewhere, Indonesia’s trade surplus for February stood at $1.28bn, below the estimated $1.581bn. Exports rose 1.01% y/y to $22.17bn, short of the expected 4.40% increase, supported mainly by non-oil and gas commodities such as animal and vegetable fats and oils, nickel and derivatives, and machinery and equipment. Manufacturing exports grew 5.24% y/y, while mining and others declined by 18.16% and agriculture, forestry and fishery fell 31.45%. Imports jumped 10.85% y/y to $20.89bn.

Indonesia’s exports rose 1.01% y/y to $22.17bn in February, with non-oil and gas exports up 1.3% y/y to $21.09bn, while imports grew 10.85% y/y to $20.89bn and non-oil and gas imports surged 18.24% y/y to $18.90bn. For January-February, exports increased by 2.19% y/y to $44.32bn and imports rose 14.44% y/y to $42.09bn, indicating stronger import growth relative to exports. Non-oil and gas exports rose 2.82% y/y to $42.35bn, while corresponding imports increased by 17.49% y/y to $36.93bn. The cumulative trade balance recorded a surplus of $2.23bn, driven by a non-oil and gas surplus of $5.42bn, partially offset by an oil and gas deficit of $3.19bn.

Hong Kong retail sales rose 19.3% y/y to $35.0bn in February, with January revised up 5.5% y/y; combined January-February sales increased by 11.8% y/y. Online sales surged 29.0% y/y in February, accounting for 8.5% of total sales. The total retail sales volume grew 17.5% y/y in February (January +3.5%). Key growth sectors for January-February included jewelry (+27.8%), motor vehicles (+28.5%) and electrical goods (+32.4%), while fuels declined by 14.2%. Seasonally adjusted sales rose 2.4% q/q by volume and 1.6% q/q by value. Growth is being supported by a resilient economy and rising inbound visitors. Hang Seng +2.04% to 25294, USDHKD +0.02% to 7.8379, 10y HKGB -1.2bp to 1.417%.