My framework for Taiwan and the TWD is a structural economic recovery driving a normalisation of inflation after the near deflation of the 20 years before 2020. That remains the theme, but there is now a clear cyclical slowing of CPI. That will intensify if tariffs trigger an export recession.

The exact timing of monetary easing can vary, but today's interest rate and RRR cuts are not a surprise. Today's moves are consistent with the PBC's usual reaction function, and with inflation so weak, further loosening should be expected.

Politically, China might well be prepared for the trade war. But I remain sceptical that is true economically. The headline of today's Caixin services PMI was soft, and the commentary noted confidence falling "to the second-lowest level recorded since data collection began in November 2005".

Given the global uncertainty, the headline manufacturing PMIs released in the last couple of days for China and Japan didn't look too bad. The tariff impact is much more visible in today's Korea and Taiwan PMIs, both of which declined sharply.

Today's BOJ's GDP downgrades were all about tariffs affecting corporates. The bank didn't sound worried about consumption. But in today's data releases, the manufacturing PMI ticked up, while consumer confidence fell sharply to a level that's only been lower three times in the survey's history.

The gap in GDP growth that has opened up between Korea and Taiwan since 2020 reflects exports, but also consumption. Data today show Korean retail sales did perk up in March. But even after that, sales are still barely above the level of late 2019, while in Taiwan they've grown almost 15%.

Goods consumption in Japan continues to struggle, with real etail sales dropping in March back to the lowest level in two years. Services consumption has been stronger, but the renewed deterioration coincides with a rebound in inflation, which is once again squeezing real incomes.

Korea was weak even before tariffs, contrasting with more resilience in Taiwan and Japan. In Taiwan, that's been because exports have offset weakening domestic demand, a pattern that hasn't yet changed: consumer confidence declined again in April, but the monitoring index through March held up.

YoY services PPI in March continued to run at above 3%, led by price rises in more labour-intensive sectors. Sequential momentum has eased a bit in recent months, but should get another boost in April, as the latest annual wage round feeds into price rises at the beginning of the new fiscal year.

As with the Reuters Tankan, the S&P manufacturing PMI didn't fall in April. The services PMI also rebounded, and the commentary shows no sign in the trend: "inflationary pressures strengthened, with input prices rising at the sharpest pace since February 2023 and output charges increasing solidly"

The clearing of some of Korea's political uncertainty hasn't helped consumer confidence. It hardly rose in April, even though the survey was taken after Yoon's impeachment verdict. Inflation expectations remained near 3%. Property price expectations also ticked up, but not as quickly as in March.