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An update on Japan's fiscal position after the release of the budget for 2026, and detailed data on government interest payments and revenue through Q125. Also, a look at financial stability issues in Korea, and fx reserves and the currency in Taiwan.
Looking through the data releases over the two weeks I've been away, and two themes stand out: rebounding activity, and firmer inflation. Both trends are most obvious in Korea. The picture is more mixed in China, but even there it looks like less deflation through to Chinese New Year.
In today's daily: China monetary developments, Japan CPI, Korea PPI, highlights of the BOJ meeting, and a link to my latest podcast. From today, I am taking a couple of weeks off. Thanks for your interest this year, I hope you've found the content useful. Happy Christmas, and best wishes for 2026.
Detailed trade data show hybrids becoming the big driver of China's auto export surge. The political tensions with China have yet to derail Japan's tourism industry. In no surprise to anyone, Taiwan's central bank kept policy on hold in its Q4 monetary policy meeting.
Lots to update on Japan today, with the flash PMI, machine orders, foreign trade and the flow of funds. And on Korea, there are the minutes from yesterday of the November MPB meeting, and today's release of the Q3 financial statement analysis data.
Today has been very quiet for releases, so just a few charts on Japan after the release of the full Tankan survey for Q4.
In addition to all today's data from China, some comments on Friday's monetary release and yesterday's high-frequency price data. In Japan, in addition to the Tankan, the BOJ today released the results of a special wage survey. Taiwan FDI data show investment in the US this year falling to USD4bn.
Some of the language in China's CEWC communiqué was encouraging. In Korea, while auto prices remain weak, overall export prices are rising and pushing up the terms of trade. Japan's monetary base is shrinking more quickly than any time since 2007. And my latest video, discussing Japan and the JPY.
A look at some positive monetary developments in China, as well as charts from the MOF's quarterly business sentiment survey in Japan, and trade data for the first ten days of December for Korea.
Goods PPI shows upstream inflation pressure in Japan remaining firm, while today's CPI and PPI releases in China point to a further lessening of deflation. Korea's labour market is complicated by supply-side changes. In Taiwan the message is simpler, with wage growth continuing to trend up.
A longer report addressing three misconceptions with Japan's fiscal position. Also, yet another month of very strong export data for Taiwan. The driver is the sale of semiconductors to the US. In November, the bilateral trade surplus with the US reached 25% of Taiwan's GDP.
China's exports rebounded in November, and so did the trade surplus. In Japan, there is lots of data to discuss today: the second release of Q3 GDP, EW survey, wage growth and BOP. There are some mixed messages, but one theme is stabilising real wages and stronger household confidence.
Today's data show another surge in overseas equity buying in Korea, consumption in Japan that is quite strong considering the headwinds of population decline and real income squeeze, and inflation in Taiwan which has now fallen to 1.2%, but I don't expect will drop much further.
In advance of next week's release of CPI and PPI data in China, some thoughts on the outlook, which I think shows a lessening deflation. Also, an update on visitor arrivals in the region (strong in Japan, weak in Taiwan), and weekly flow data in Japan.
China's November S&P services PMI didn't confirm the weakness seen in the official version. S&P today also released its services PMI for Japan. That sent the same message as other sentiment surveys: far from weakening, economic momentum in Japan is improving. Also today, my latest video and podcast.
Japan's consumers like what they are seeing of Sanae Takaichi, with another bounce in confidence in November. That removes another reason for BOJ caution. In Korea, inflation remains at around 2%, but services inflation – a better measure of domestically generated price pressures – is higher.
The big policy event today was BOJ Governor Ueda's speech, which further increased the likelihood of a near-term hike. In terms of data, Japan released quarterly profits data (strong in non-manufacturing) and weak PMIs for the region contrasted with strong semiconductor export data for Korea.
Today's charts cover October services trade and the implications for China's GDP growth in Q4; Tokyo inflation (showing stronger rents), and retail sales in Japan; weak October activity in Korea; and yet another round of strong GDP data in Taiwan.
The big event today was the BOK meeting. The bank was a bit more constructive on the outlook, but data that was separately released show labour market conditions remaining weak. Elsewhere, profits in China are flat-lining, exports in Japan aren't dropping, and macro data in Taiwan remain strong.
Some thoughts on Korea in light of today's business sentiment survey, and before tomorrow's BOK meeting. Also, today's services PPI inflation for Japan. The details were mixed, but the BOJ anyway seems to be sending the message (again) that while the JPY is so weak, it is headline CPI that matters.
Both consumer sentiment and house price expectations in Korea were firm in November. That's significant, when consumer fiscal handouts are winding down, while macro-pru measures on housing have been stepped up. In Taiwan, the consumer mood is also improving, with retail sales rising in October.
That high-frequency upstream prices in China through mid-November are stable offers an important contrast with the weakness of FAI. In Taiwan, the labour market remains tight, with the unemployment rate staying at the lowest levels in over 20 years.
The big releases today were Japan CPI and trade for October and November PMIs, and Korean October PPI and exports for the first 20 days of November. Also, a longer note on Korean capital flows, and an update of the detailed trade data for China shown in our interactive dashboard.
I've been busy today, so just a couple of quick comments, covering BOJ board member Koeda Junko's speech, and the further rise in Taiwan's current account surplus.
A quiet day for data today, with only machine orders in Japan and Korean IIP data for Q3. The IIP data are interesting, showing Korea's structural emergence as an international creditor. I would have expected that to put a ceiling on $KRW, but that impact really hasn't been obvious in recent months.