The strength of the current account in August shows Q3 will be another blowout for nominal GDP, improving all Korea's macro ratios. That provides cyclical and structural reasons for KRW strength and relative outperformance of longer-term KTBs. The headwind remains equity outflows.

Underlying inflation was firm in September, because of energy, and the surge in semiconductor prices raising the price of electronics devices. September data show the chip shock isn't over yet, and the BOK expects demand-pull inflation to also become more obvious in the coming months.

Softer output and capex in August is most likely noise, reflecting temporary issues in auto production, and lumpiness in investment spending on transport equipment. Even with that, Q3 GDP growth is tracking around 1% QoQ.

In many advanced economies, governments are drowning in debt. But in Korea and Taiwan they are floating up on the flood in revenue generated by the semiconductor boom. There is so much money that both economies plan looser fiscal policy while also paying back debt.

Last week's GDP data showed nominal growth of over 25% YoY in Q2. Most of that was in the form of corporate profits, but employee compensation still rose 8% YoY. With the government planning growth in fiscal spending of 12% in 2027, there are more signs of the IT sector lifting the broader economy.

Today's BOP data show that after selling more than USD30bn of domestic equities in June, foreigners purchased USD6bn in July. That swing goes a long way to explain the sudden appreciation of the KRW. That should be able to continue, given CA surplus of over 20% of GDP, strong economy, and BOK hikes.

I thought the underlying data in today's CPI release were firm. Despite an easing in travel expenses, core inflation (excluding mobile phone bills) remained at 2.8% YoY, the trimmed mean rose, and the diffusion across all items ticked up.

Output in July retained the gains of June, and capex spending rose further. Both suggest a strong start for GDP in Q3. Retail sales were weaker last month, but the household sector should start to benefit as the government spends the 20% growth in tax revenue of recent months.

Today's BOK meeting didn't throw up any big surprises: core CPI and growth forecasts were raised against the backdrop of the TOT shock, and the bank hiked again with the aim of being "pre-emptive". However, Governor Shin's remarks at the press conference produced a lot to digest.