Japan's exporters haven't reacted in standard fashion to JPY weakness, not cutting prices to increase volumes. Indeed, volumes fell YoY in August. That contrasts with the clear recovery in the rest of the region. It means higher JPY earnings for exporters, but less incentive for domestic capex.

Exports feel a bit peaky, and CPI inflation has eased. But property price inflation isn't cooling. Perhaps an export slowdown changes that – the fastest price gains are in Hsinchu, home of TSMC. But unless and until that happens, it is very difficult for the central bank to turn doveish.

This week's announced rise in the retirement age is economically welcome. But the rise of 3-5 years, implemented over 15 years, is modest. In that time longevity is likely to rise almost as much, meaning by the time this week's changes are completed, China will still be at square one.

The shift in $JPY is clearly having an impact, with JPY import price inflation dropping from July's +10.8% YoY to just 2.6% in August. But BOJ officials suggest they remain confident in the underlying outlook, which isn't unreasonable given the resilience of survey data such as today's BSI.

A critical part of the BOJ's positive narrative is the labour market tightness shown by the Tankan. That survey will be released next in early October, but early signs are positive, with today's BSI survey from the MOF, also quarterly, showing tightening over all three of its measurement periods.

Just looking at the headline labour market data, and it would be difficult to know that the BOK is moving steadily towards a rate cut. Data released today show that in August, the unemployment rate fell to a new multi-decade low of just 2.4%!

TSMC's sales were softer in August (especially after adjusting for seasonality), and with sentiment towards the sector starting to weaken, it seems possible that the best of the cycle is now in the past. That will limit further improvement in Taiwan's overall exports.

In today's second release, Q2 GDP growth was revised down, from 3.1% QoQ annualised to 2.9%. The driver was weaker capex, which, like consumption, has yet to rise back above pre-covid levels.

The recovery in Q2 GDP was driven by consumption, and the BOJ's monthly proxy for PCE suggests growth has continued into Q3. Today's data show consumption grew in both June and July, the first two consecutive months of growth in almost a year.

It can be seen in the PMI and 10-D upstream prices: the mild firming of PPI of 1H24 is now rolling over. It is also evident in global commodity prices, so this isn't a China-specific phenomenon. But when inflation is already so low, it matters more for macro in China. Click to see the other charts.

There's probably some noise in today's data showing a big fall in August, but the general decline in core inflation in the last few months will be allowing the CBC, like the BOK, to become more relaxed about the outlook for prices.