25 Apr 2022 The BoJ will Remain Indifferent as Inflation Approaches Its Target

Japanese inflation is still rising, and is all but guaranteed to break through its target in April...

...But the BoJ has already indicated it has no intention of changing tack; rates won't rise this year.

Policymakers are flirting with the idea of currency intervention, but Kuroda won't take the lead.

Craig BothamChina+

22 Apr 2022 The PBoC Buckles Up for the Renminbi's Wild Ride

China's currency is finally succumbing to pressure from multiple fronts, and has further to fall.

The renminbi poses a key constraint to PBoC policy, which Beijing will ultimately override.

April export data from Korea show that China's bat- tle with Covid will weigh heavily on global trade.

Craig BothamChina+

14 Apr 2022 Zero-Covid Weighs on Trade, and Obliterates Domestic Demand

China's trade surplus enjoyed a final lift in March, as import demand collapsed, and exports rose...

...But look through the seasonal distortions, and exports were weaker than they appeared.

Beijing has promised to offset some of the pain from zero-Covid, but stimulus looks light, to us.

Craig BothamChina+

6 Apr 2022 PMIs Show Domestic and External Demand are Diverging for Japan

Japan's services PMI rebounded in March, adding to evidence of a domestic recovery in late Q1.

Unfortunately, 2022 has had a slow start, and GDP probably fell in Q1, quarter-on-quarter.

Inflation still isn't behaving as the BoJ would like, but the sands are shifting on the yen.

Craig BothamChina+

4 Apr 2022 Whether China Sneezes, or Locks Down, Asia Catches a Cold

• China's lockdowns and other restrictions weighed on regional activity in March, particularly exports.
• Factory closures in China have tightened some bottlenecks, but others may have loosened.
• The war in Ukraine has added to cost pressures, and worse is to come on both fronts.

Craig BothamChina+

1 Apr 2022 A Sharp Slowdown for China in March, but No New Stimulus, Yet

• China's economy is groaning under the strain of increasingly restrictive zero-Covid policies.
• Factory closures and lockdowns took a heavy toll on both manufacturing and services in March.
• Policymakers are relying on the existing toolkit, deployed more rapidly, for now.

Craig BothamChina+

25 Mar 2022 Japanese PMIs Add to Evidence of a Slowdown in Global Trade

• We think Japan's flash manufacturing PMI was mostly bad news, despite a bounce in the headline.
• Forward-looking components turned south, and we expect the final print, and next month's, to be softer.
• A drop in new export orders is another signal that global trade is struggling amid renewed shocks.

Craig BothamChina+

22 Feb 2022 A Winter Chill in East Asia in Early February, but a Thaw is Coming

• Korean exports had a slow start to February, chiefly because of holidays in Korea and China.
• Japanese manufacturing similarly looks soft at the moment, but should recover almost fully in March.
• Little sign of supply chain improvements so far, but a reopening is underway in China.

Craig BothamChina+

21 Feb 2022 A Brief Lull, but Japanese Inflation will Soon Jump, Relatively Speaking

Craig BothamChina+

18 Feb 2022 China Weighs on Japanese Exports, but Weakness is Overstated

• Japanese export growth slowed unexpectedly in January, but it's not as bad as it looks...
• ..factory closures in China, thanks to holidays, pollution, and Covid, explain much of the weakness.
• We remain positive on the global demand backdrop for exports, but supply congestion is rising.

Craig BothamChina+

17 Feb 2022 Pigs Might Fly, but they Bring Lower Inflation in their Wake

• Chinese inflation continued its decline in January, thanks to base effects and weak demand.
• The main constraint on PBoC action is worries over financial stability, not inflation.
• China should export disinflation in 2022, a soothing balm for policymakers outside China.

Craig BothamChina+

16 Feb 2022 Japan Returns to Growth, but the Bumpy Ride isn't Over

• Japanese GDP growth returned to positive territory in Q4, thanks to a rebound in consumption.
• Consumption will be under pressure in Q1, thanks to Omicron, but investment should recover.
• Chinese stimulus remains very modest, illustrated by a net withdrawal of liquidity this month.

Craig BothamChina+

11 Feb 2022 The State Sector Doubles Down as Risk Appetite Dwindles

• Record weakness in Chinese M1 growth is only partly attributable to seasonal and base effects...
• ...Weaker risk appetite, and softer economic activity, underlie the drop in liquid deposits.
• Credit growth continued to become more heavily dominated by the state in January.

Craig BothamChina+

10 Feb 2022 Regional Manufacturing Faces a Drag from China

• Regional manufacturing PMIs have diverged in recent months, thanks to Chinese factory closures.
• Japan and Korea likely will converge towards China, but should be cushioned by external demand.
• China's employment situation is getting worse, but policymakers are staying the course, for now.

Craig BothamChina+

4 Feb 2022 Korean PMIs Lend Further Support to Strong External Demand Picture

• Korea's manufacturing sector is having a happy new year, despite Omicron outbreaks.
• The PMI survey provides encouraging signs for global demand, with new export orders bouncing...
• ...It also points to an easing of some bottlenecks, with more to come as stockpiling fades.

Craig BothamChina+

2 Feb 2022 Korean Exports are Doing Better than the Data Suggest

• Korean exports indicate continued strong external demand, despite the January slowdown.

  Holiday distortions and base effects weigh on the year-over-year number.

  Bottlenecks, and Chinese factory closures, are the main risks to the outlook.

Craig BothamChina+

25 Jan 2022 Omicron Takes its Toll on Japanese Activity, Despite a Boost to Exports

• Japanese manufacturing activity strengthened in January, likely on the back of external demand.
• Soaring Covid cases have hit Japan's services sec- tor; surging hospitalisations will worry China..
• Price pressures picked up again, though the Japanese consumer is unlikely to notice much.

Craig BothamChina+

24 Jan 2022 Underlying Inflation Pressures are Already Fading in Japan

• Japanese headline inflation picked up in December, but core measures lost momentum.
• Early Korean trade data point to a weak start to 2022 for global trade, thanks in part to Omicron.
• External demand should rebound swiftly, but the bigger risk is disruption to Chinese production.

Craig BothamChina+

21 Jan 2022 Trade Regathers Momentum, but Bottlenecks are Building Again Too

• Japanese December export data are better than they look, along with the rest of the region.
• External demand still looks robust, despite Omicron, but supply challenges loom large.
• Omicron is in fact more worrying from a supply perspective, given its implications for China.

Craig BothamChina+

17 Jan 2022 Weaker Imports Suggest a Weaker Domestic Economy in China

• China posted a new record-high trade surplus in December, boosting the renminbi.
• Behind the headline, however, lurks a troubling weakness of imports and domestic demand.
• Korea's central bank hiked rates to 1.25%, and signalled more to come this year.

Craig BothamChina+