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It isn't worth paying too much attention to China's detailed trade statistics for Jan-Feb, given new year distortions. That said, the trend rise in capital goods imports is an under-appreciated shift. Tourist arrivals in Japan remained strong in February, as did Taiwan export orders.
As expected, no change in policy from either the BOJ or Taiwan's CBC in today's monetary policy meetings. Concerns about inflation are greater in Japan, which makes sense given firm CPI and an improving cycle. The theme for the CBC remains strong growth and modest price increases.
Flow of funds data show ongoing improvement in Japan's fiscal position through end-25. Exports ticked down in February, but because of Chinese New Year rather a new step-down. Employment in Korea rose in February, but the more noticeable change is the further rise in the female part rate.
While all the main China Jan-Feb indicators came out today, I think the more important releases were the weekend data showing a further rise in upstream prices, and fx settlement showing continued capital inflows. In Taiwan, wage growth slowed in January, but that is probably holiday related.
The annual survey of firm behaviour in Japan's shows the structural rise in inflation expectations is continuing. Today's official February PMI in Taiwan points to higher input prices even before the oil price hit. Like the rest of the region, the PMI also shows strengthening cycle momentum.
Today's quarterly business sentiment survey from the Cabinet Office and MOF in Japan shows the same bounce in manufacturing confidence that has been visible in the different monthly surveys. Korean job openings for January were weak, but that could reflect this year's rebasing of the data.
The big dynamic in Asia in early 2026 has been the strength of the semi cycle. That can be seen in today's Japan February export prices, and Korea March 10-day March exports. That provides some offset to the rise in energy prices, though not enough to matter if the Strait of Hormuz remains closed.
Jan-Feb trade data for China were strong, but still distorted by LNY. Q4 GDP in Japan was revised up, boosted by rising private domestic demand. Korean GDP contracted in Q4, but an improving ToT boosted real incomes. TSMC sales dipped in February, but equities don't yet point to a big downturn.
A few data releases today: inflation in China; economic sentiment, bank loans and BOP in Japan; foreign trade and monitoring index in Taiwan. The lessening of deflation in China is an underlying change. The other data are distorted by the Chinese New Year, and will now be shifted by the Iran war.
Underlying inflation in Taiwan is catching up with the Korean run-rate of 2%. The CA surplus in Korea is starting to follow the sharp rise in the surplus in Taiwan. Consumption in Japan is showing stronger momentum.
Before the Iran war, Taiwan's industrial sector was strongest, and leading indicators pointed to further acceleration. But in terms of broad recovery, prospects in Japan looked best, with industrial sentiment rising, but consumer confidence rebounding too.
While the big news is the bloodbath in markets, particularly Korea, there were lots of data releases today. They show that before the Iran war, economic momentum was good in Japan and Taiwan, and poor in Korea. In China, it could be either, depending on which PMI you believe.
Lots of charts on Japan, on profits, capex, and unemployment. Also, highlights from today's PMI for Korea. That is solid, but not as strong as in Japan and Taiwan. Like Taiwan, however, the Korean PMI points to rising price pressures – and that even before a new oil price shock.
The latest Middle East war might change everything again. But before the latest conflict, Asia's manufacturing cycle was accelerating. That's clear with the chip-led export surge in Korea in February, and the stronger manufacturing PMIs for Taiwan and Japan.
A few secondary data points in Japan: Tokyo CPI, retail sales and IP. Also, with both Korea and Taiwan releasing January data, a couple of charts on tourism. Finally, just to let you know that I am travelling the next couple of weeks. The daily will still appear, but there might be some disruption.
The big policy event today was the BOM meeting. The big data release was Taiwan's Q4 BOP data, showing a huge current account surplus. Also worth noting today are trade data for Japan for the first 10 days of February. And we also have a new video, discussing the cyclical outlook for China.
Highlights of a longer note summarising Korea's cycle before the BOK meeting tomorrow. Also today, Korea's IIP position in 2025, as well as services PPI inflation in Japan and labour market data for Taiwan in January.
A few charts from a longer slidepack looking at the remarkable changes in Taiwan's economy since 2020, details of consumer confidence and PPI in Korea, and export volume data for Japan for January.
Because of the new year holiday, the trade data across the region for the first couple of months are a bit suspect. That's particularly true when the data don't even cover the full month. Still, in the first 20 days of February, Korean chip exports, and shipments to China, look strong.
Japan's economy is looking different in 2026, with manufacturing sentiment improving, goods inflation easing, but service price and wage inflation holding up. Korea, meanwhile, faces some of the same issues as in 2025: while household debt is easing, property price inflation isn't.
Highlights of a longer note looking at the impact of China "shocks" through the prism of the terms of trade. The conclusion is that for Asia, the second China shock is shaping up to be less damaging than the first. Also, summary charts of today's machine orders in Japan, which were strong.
With most of the region still on holiday, today's daily focuses on today's export release from Japan. The big rise in January, led by shipments to China, will largely be the result of holiday front-loading. But the general direction is for exports and manufacturing to be a bit stronger in 2026.
December services activity in Japan dipped. But that is likely temporary: service sector sentiment remains strong, and falling China tourism has been offset by more visitors from Korea. Details of Taiwan's Q4 GDP release shows the terms of trade boosting real national income per capita by 15% in Q4.
Today's headline Q4 GDP data for Japan were weak, but the details were better, and the 2026 outlook remains better. The weekend's high-frequency price data for China – the last release before the holiday – indicates the lessening of PPI deflation continued through the first 10 days of February.
Lots of data releases across the region today. Two themes stand out: 1) Rising CA external surpluses and inflows, with the latest indicators coming from China and 2) improving terms of trade, seen in Korea's export/import price data for December, and Taiwan's Q4 GDP release.