With some trepidation, I am releasing my first....rap. Perhaps not the vibe you would expect from me, or from a rap, given both it and the accompanying video are another attempt to argue against the idea of Japanification.

I think the curve should flatten, as the BOJ continues to hike because of decent growth and strong inflation, while the longer-end is dampened by medium-term headwinds for inflation and a repatriation flow. These I think remain the themes, though the message from today's releases is mixed.

October export growth was the strongest in 20 years. That doesn't tell us what happens next. If 2025 is any guide, even the slowdown suggested by equities might not happen. What the data do say is that AI tech demand remained extremely strong in October, leaving Taiwan with an enormous trade surplus

PPI inflation accelerated again in October, a rise that is supporting nominal GDP and would usually lift corporate profits too. But this is all externally-driven. Downstream prices in PPI and the overall CPI remain weak, and outside of food, leading indicators point to slower inflation in 2027.

The outlook for macro markets in the region remains closely tied with the fortunes of the AI cycle. While uncertainty remains, rates, currencies and equities will likely trade together. Currencies might end up looking different, depending on how the dollar reacts to any shift in semi demand.

The surge in the Taiex of recent years means potential for big foreigner selling of TWD. But, inflows haven't been big, equities won't all be sold, and CBC has ability to fight back. The bear case is Taiwan recession versus US resilience, though even then, "fundamentals" for TWD would be strong.

CPI is being affected by cross-currents including very high upstream price inflation, government subsidies and holidays. The underlying picture is inflation of around 2%, which by Taiwan standards is high. I think an economic slowdown is needed to prevent it moving higher.

Monthly (-ish) regional update of cycles and market themes.

Cost-push – both energy and the spillover from higher chip costs into prices of downstream devices – is keeping inflation near 3%. The BOK expects demand-pull factors to become more obvious. So inflation will likely stay elevated, through for BOK policy, it is overall semi cycle that matters more.

Taiwan's overall PMIs look fine. The details are shakier, but so far, it looks like the weakness is coming from softer demand for consumer tech as semi prices boost the cost of electronics devices. The data don't (yet) show obvious deterioration in the data centre component of the AI boom.

The unusually long section of analytical boxes in the BOJ's main outlook report shows that the bank has a lot on its mind. That inevitably brings nuance. However, the overall tone is clear: nominal growth remains strong, and financial conditions loose. There's no clear reason not to hike further

China's nominal cycle looks to be slowing again. The rest of the region remains strong, but confidence that this strength can be retained is fraying, and will likely remain under pressure, especially if concerns over the data centre build-out and energy prices worsen again after the mid-terms.