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East Asia Econ

The platform for tracking and understanding East Asia macro

Latest analysis

China – incrementally encouraging

China – incrementally encouraging

Yesterday's monetary and credit data for September weren't bullish, but I do think they were incrementally encouraging: excluding CGBs, credit issuance and the credit impulse ticked up; the firming of M1 growth has continued; and there is more evidence of a floor in the M1:M2 ratio.

2 min read

Japan – Tamura's upside risks

Japan – Tamura's upside risks

Naoki Tamura's speeches are always clear and interesting. Some of his remarks today overlap with points I've highlighted the last few months: the strength of the Tankan survey and sakura report; repressed inflation in public services prices; the negative impact of inflation on pensioners.

4 min read

China – the case for higher rates

China – the case for higher rates

For the first time since 2021, my models show a fall in the probability of easing. The backdrop is effective monetary policy: inflation is low, but there aren't signs of rising real rates. For now, my base case is rates stop falling. For rates to rise, inflation needs to show up outside of equities.

2 min read

China – PPI stabilises, but not firmly

China – PPI stabilises, but not firmly

The stabilisation of PPI is fragile, with continued sharp falls in some of the sectors targeted by anti-involution, as well as continued weakness in building materials prices. In CPI, falling food prices will eventually reverse, but soft services prices shows underlying CPI inflation remains weak.

2 min read

China – export trend still intact

China – export trend still intact

Shipments to the US remain as low as in May. But with exports to other regions continuing to rise, the uptrend in overall shipments that began in mid-2023 remains intact. At the same time, imports in the last few months have risen a bit, so the trade surplus, finally, has eased back.

2 min read

Last week, next week

Last week, next week

The short-term theme is uncertainty, with the ruptures in both the US-China trade truce and the LDP-Komeito ruling coalition in Japan. Both are negative for risk appetite. In terms of the data flow, the highlights in the next few days are China inflation, and TSMC's quarterly earnings.

6 min read

China – inflation update

China – inflation update

Upstream prices in level terms have stabilised, but as with food prices, are still falling YoY. With aggregate spending and PMI output prices remaining weak, core inflation is unlikely to be rising. The one upside risk is an end to the multi-year trend of households shifting money to time deposits.

3 min read

Japan – PPI rising again

Japan – PPI rising again

In September, even before the renewed JPY depreciation of the last week, PPI inflation rose. By raising import prices, USDJPY back above 150 will mean input price inflation remains stronger for longer. The (relative) hawks at the BOJ will be becoming more convinced that inflation is sustainable.

3 min read

Korea – the Three Ds

Korea – the Three Ds

My latest video, looking at the three Ds that are challenging Korea's structural growth prospects: Demographics, Debt, and a Development model that is struggling to cope with the competition emerging from China.

1 min read

Japan – hemmed in

Japan – hemmed in

With JPY depreciation unpopular and the cycle intact, it is unlikely that the Takaichi administration can really make the BOJ hike even more slowly than it has been. The policy that would work better for defusing the cost of living crisis would be fiscal loosening to raise household incomes.

6 min read

Japan – wage growth a bit better

Japan – wage growth a bit better

One of the data points that challenges the BOJ's confidence on wage-price developments is slowing part-time wage growth. That ticked up in August, as did base pay for full-time workers. By historical standards, both are high, but growth in overall earnings growth continues to trail price inflation.

2 min read

Last week, next week

Last week, next week

Market volatility is poised to rise again. In Japan, the obvious reason is the election of Takaichi, whose Abenomics-leanings are in conflict with the ongoing firmness of inflation. In Korea and Taiwan, the trigger is US relations. China, by comparison, looks more stable.

6 min read

Summary charts