Credit growth continues to slow in China. The trend for M1 also remains down, warning of more deflationary pressure in 2027. In Q3, the current account surplus widened. In Korea, the TOT dipped in October, hinting at a peak in the spectacular rise in national incomes of recent months.
The terms of trade dipped in October, hinting at a peak in the spectacular rise in national incomes of recent months. However, when thinking about the implications, two caveats are needed: is the October decline monthly noise, and is the rise in national incomes just the first phase of the semi boom
Rather than Asada's speech today, I spent most of the day thinking about Ueda's much more interesting remarks at the weekend. Import price inflation in Japan accelerated in October, CPI in Korea is on track to get back to 3% this month, and interest rates in China continue to fall.
In a speech at the weekend Governor Ueda laid open the possibility that Japan might finally be able to achieve its 40-year quest for "domestic demand-led adjustment". That's a big deal. Key is how corporate savings and investment react to higher nominal growth and labour shortages.
Money supply growth in Japan is starting to slow. In Korea, exports are off to a strong start in November, and the labour market is stating to tighten. Taiwan's tax income is surging, weighing on reserve money, but labour demand is strong. Also today, my first....rap. Youtube link is attached!
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.
There were a number of releases in Japan today, so today's note includes a review of those. In China, exports dipped in October, and while that is probably noise, auto exports have flattened out since June. In Taiwan, October was another strong month for TSMC.
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.
Today's PPI inflation data in China were strong. Taiwan's export data for October were even stronger. In Japan, the BOJ's proxy for PCE weakened in Q3, but the underlying trend, particularly in per capita terms, remains firm.
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.
