The BOK remains hawkish, continuing to stress that containing inflation is its number one goal. It will probably be at least another couple of month before the growth picture starts to challenge this stance.
The business sentiment survey shows activity remains reasonably firm, while inflation momentum is fading. At a minimum, the pace of BOK tightening should be slowing.
The recent sharp rise in inflation expectations stalled in August. That takes some pressure off the BOK, but for the central bank to relax, services inflation and growth need to slow more.
Today's rate cuts were focused on mortgages. That follows Q2, when home loan rates fell at the sharpest pace on record, and yet property remains weak. There likely needs to be more direct help for developers and consumers, and a more united policy showing from Beijing, to get the cycle going.
Foreign trade data releases from Japan, Taiwan, and Korea today aren't entirely consistent, but it does look like exports are no longer growing, with signs of a slowdown in demand from the US beginning to appear.
This is what happened on East Asia Econ this week. Region The continued fall in upstream inflation in China is important for the rest of the region: as an example, Chinese input prices tend to lead those in Korea. But the deflationary trend in China should also have implications for the rest of the world. The current weather-related supply disruptions in Sichuan and elsewhere at most are only likely to
Inflation rose again last month, and further rises are likely. The steep coincident increase in inflation expectations raises the risk that the rise in CPI could be sustained, but that would seem more likely if services prices were also increasing more quickly, and the labour market tightening.
PPI inflation and saver liquidity preference are two indicators worth monitoring as leading indicators for China's cycle. Data releases in the last few days don't suggest either are turning up, though corporate liquidity preference last month at least didn't worsen further.
Q2 GDP shows economic recovery remains slow and uneven, with downside risks in early Q3. Capex is rising, but really only in nominal terms. Exports are going sideways, though there might be some upside risk from autos. Relatively high inflation will likely peak soon. The monetary base is shrinking.
The cycle is weak, and yet the market was surprised the PBC cut rates yesterday. Central bank rhetoric had been suggesting rates had bottomed. But low inflation and signs of rising real rates make it more likely that rates fall rather than rise.
The cycle remains weak, with the growing risk of a further step-down in the reminder of the year as exports slow. Following today's interest rate cut, further monetary easing remains likely.
Headline credit growth weakened in July, and even though M1 growth strengthened, the data don't suggest "stimulus" that can turn around the current trajectory of the economy.
Today's labour market report isn't of much consequence for the BOK. The pace of the recovery since 2021 has started to fade, but the labour market still remains very tight.
Today's July PPI and CPI data in China suggest again that deflation is a bigger risk than inflation.
China's cycle remains weak. Perhaps money data and excavator sales for July will reinforce the message of the construction PMI that stimulus is feeding through. Otherwise, the risk remains of a growth accident that, via a weaker CNY, gets transmitted to the rest of the world.
Taiwan exports look to have peaked. Shipments haven't started to fall yet, but the stalling in upwards momentum should still continue to weigh on the TWD.
The Economy Watchers survey fell again in July, suggesting no change in the slow pace of economic recovery out of the Covid-19 pandemic.
Exports remain resilient, but the leading indicators continue to point down, with imports of components slowing again in July. It is likely exports are contracting before the end of the year.
Korean July trade data were consistent with three themes for the regional export cycle: momentum is slowing; so far, it is a slowdown, not a recession; but leading indicators point to exports starting to contract before year-end.
Inflation in Taiwan looks quite well contained, particularly as the manufacturing sector looks to be rolling over. That said, given the disruption caused by the recent Covid-19 outbreak, there's probably more upside risk from services prices than there usually would be at this point in the cycle.
Labour market data continue to be solid, but not so tight as to suggest a build-up of domestically generated inflation.
Chinese exports have boomed since 2019. That boom isn't (yet) turning to bust, but it is likely ending. That's a big issue when the rest of the economy is so weak. Even without a new covid outbreak, there's a rising risk of a real growth accident in 2H22.
Korean inflation is probably close to peaking as the rise in goods prices starts to decelerate. But services price inflation remains firm, and while that continues, there isn't much room for the central bank to be able to relax.
The sharp fall in the PMI highlights downside risks for the export cycle. That matters for Taiwan and the TWD, but also for the macro picture in Korea and China.
The latest fall in Covid-19 cases could lift activity in August. But with property still very weak, inflation momentum softening and exports slowing, it feels that any upturn in growth would be short-lived.