Paul Cavey

China – Q2 GDP

June data improved, and in July the economic indicators will likely be stronger again. But it doesn't feel like the conditions are yet in place for a sustained recovery in economic momentum through 2H. Indeed, it feels like there is a rising risk that the recovery runs out of steam.

China – June foreign trade

Korea - July BOK meeting

The BOK was yet more hawkish today, signalling controlling inflation, and specifically inflation expectations, remained the bank's top priority.

Korea – June labour market

The June labour market release wasn't significant for the BOK. There was a pause in the rapid tightening of the last few months, but the unemployment rate remains very low, and employment high.

Japan - June PPI

China – June monetary data

Credit data were strong in June, and big enough to help short-term market sentiment. But the details were weaker, with the rebound being driven by government bond issuance.

Japan – May machinery orders

China - taking stock

The economy is still recovering from the lockdowns of April and May, and that recovery likely still has some room to run. But it feels like downside risks are now growing again. This week's export and monetary data will be useful in evaluating just how large those risks are.

Last week, next week

Japan – May wages

The labour market is tightening. But while wage growth is accelerating, the pick-up is modest, and doesn't look sufficient to create a lot of upwards pressure on prices.

Taiwan - June CPI

Japan – Q2 consumer confidence

Taiwan - June foreign trade

Exports held up again in June, but the outlook is changing as expectations for the semiconductor industry become more bearish. The recent equity sell-off suggests Taiwan's exports could be falling 10-20% YoY in the coming months.

China - June inflation

June's data still don't show much inflation in China. And, outside of food prices, there's not much sign of that being about to change.

Japan – June Economy Watchers

Japan - June monetary base

Despite all the JGB buying in June, Japan's monetary base actually contracted in the month. That was because of the winding down of the Covid-19 lending programme, and shows monetary expansion isn't as wild as headline data alone would suggest.

The China Diviner

China didn't ease like the US in 2020, tightened in 2021, and yet leverage is still rising. In the short term, there's unlikely to be a change without more policy support for households. With Beijing against welfarism, that seems unlikely, which suggests a structural outlook of lower interest rates.

Korea - June CPI

Korean inflation rose again in June. Worryingly for the BOK, while goods price inflation is softening a touch, domestic services inflation is still accelerating.

China – taking stock

The themes for China cycle are unchanged: recovery; not huge stimulus; an ongoing commitment to zero covid; and a lack of underlying inflationary pressure. These themes need to be challenged before there are bigger shifts in China's financial markets.

Last week, next week

Taiwan - June PMI

Japan - June Tokyo CPI

The sharp acceleration in CPI inflation of the last couple of months faded in June in Tokyo. Without a new driver emerging, it seems likely that national inflation is close to peaking, though JPY weakness will likely prevent inflation from falling too far.

Japan - May labour market

Japan - Q2 BOJ Tankan

Korea - June exports and business confidence