The BOJ didn't say much new today, but the authorities overall did make more of an attempt to put a lid on recent market volatility. In Korea, both consumer confidence and house price expectations remain strong. Taiwan retail sales slowed into end 2025, but IP took another step up.
At its meeting today, the BOJ was again more positive on the outlook, but only incrementally. However, the authorities overall have been trying to put a lid on market volatility, perhaps via intervention, but also an interview by Takaichi. Data, meanwhile, show the economy still has good momentum.
Exports and the BOJ's senior loan officer survey in Japan; lending standards and Q4 GDP in Korea; and Taiwan's labour market data for December.
Today's Q4 GDP data show the economy contracted again late last year, and grew just 1% in 2025 as a whole. That partly reflects weak construction, but facilities capex is also weak. And yet, this week's Loan Officer Survey warns of no lasting slowdown in housing.
Three updates today: details of the surge in China's auto exports at end-2025; further signs of improvement in Japan's government finances (at least that's true before the election pledges); and strengthening Korean export data.
Detailed Q4 GDP data for China show construction (especially) and manufacturing falling further as a proportion of output, but services rising. In Korea, PPI inflation in December remained at 1.9% YoY. Taiwan export orders crept up in last month, another sign that activity remains resilient.
Today's big update was Q4 GDP data for China, showing a nominal pick-up, but (as might be expected) conflicting details. In Japan, Q4 consumer confidence improved, while data through November showed a further acceleration in services output.
Most important for markets is today's Q4 data is the pick-up in the deflator and nominal GDP, which external trends suggest can run further. In terms of the details, the data show two big discrepancies: collapsing FAI v industrial stability, and falling retail sales v rising consumption share of GDP
Last week's most important release was China's USD100bn fx settlement data. Capital inflows will boost money supply. A stronger CNY should also help support regional currencies. The impact is overshadowed by politics in Japan, but should be more powerful in Korea and Taiwan given the semi boom.
Highlights of a longer note reviewing China's cycle and market prospects. Also, a couple of charts on Japan, showing the continued firmness of business confidence, and today's weekly flow data.
Some of the signs of domestic stabilisation I'd been tracking in 2025 faded into year-end. However, they didn't disappear entirely. China is also starting to benefit from the global tailwinds of weaker USD and rising commodity prices, creating upside risks for China's nominal cycle.
Lots to discuss today: domestic and foreign money flows in China; PPI and export prices in Japan; the BOK's January monetary policy meeting; and the read-through for Taiwan's economy from TSMC's bullish 2026 outlook.
China's release today of December data for money, credit and fx settlement tell three stories: domestic savings outflows have lost momentum, credit ex-government is looking a bit stronger, and capital inflows are really picking up. If right, the last dynamic is the most important for markets.
The BOK isn't getting carried away by the remarkable rise in semiconductor prices, but it did today say the chip cycle is moving growth risks to the upside. It also terminated talk of rate cuts, though that isn't just about growth, with the bank making clear that KRW weakness is a key consideration.
Japan's current run of PPI inflation is almost the longest since at least the 1980s, but looks well-supported. Prices have recoupled with the global cycle, and are being boosted by JPY weakness. Furthermore, while it was feared that tariffs would be deflationary, export prices are rising.
China's exports ended 2025 with a bang, with auto shipments surging. Import demand is much weaker, but did at least trend up last year. Also today, some charts on bank lending in Japan, which is strong, and a cycle review of Korea before tomorrow's BOK meeting.
Domestic sluggishness and financial stability concerns aren't changing, so likely keep the BOK on hold tomorrow. But there is a new development: the 10x rise in the DRAM price. To me, that is shifting cycle risks to the upside. Tomorrow's meeting will be important if that is the bank's view too.
Some charts showing how Korea is structurally converging with Japan and Taiwan. One area of convergence is the current account surplus, which across the region is large and growing, now up to 6% of GDP in Japan. Other data today in Japan reiterate the improvement in cyclical momentum in late 2025.
A longer note summarising cycle and structure and arguing that risk-reward is moving in favour of Asian currencies. Against that framework, today's export data for the first 10 days of January in Korea were soft. But Taiwan wage data for November tick the right boxes.
Using an update of my regional chartpack to think about exchange rates. Specifically, I think the cycle and structure dynamics are moving risk-reward in favour of Asian currencies. I'd argue that is true if the global picture is unchanged, but it could also be true if conditions in the US falter.
Themes: capital flows v CNY appreciation in China; fiscal fear v real policy rate in Japan; foreign v domestic equity strength in Korea; policy status quo v export surge in Taiwan.
Longer notes today on China inflation, Korea balance of payments, and Taiwan 2025 trade and external surpluses. In Japan, data were released today on the monetary base, consumption, and 20-day exports.
Even with data today showing a dip in exports in December, Taiwan's trade surplus last year reached the sort of sky-high levels last seen before the big TWD appreciation of the 1980s. Barring a real dislocation in AI hardware demand, underlying pressure for renewed appreciation will grow in 2026.
The second-derivative improvement in inflation is continuing, and should be seen in a better deflator when the Q4 GDP data are released later this month. However, there's not yet enough to think the trend can persist beyond Q126. One factor that could derail the improvement would be a stronger CNY.
November BOP data show another big current account surplus – and more big outflows into offshore equities. We can't be sure that outflows have yet peaked. But with the KRW cheap, semi exports gaining momentum and the government taking KRW stabilisation measures, risk around the currency are shifting