Inflation hawks might want to take a closer look at China's latest data, which just go to show how warped their worldview is becoming.

Anyone bracing for Federal Reserve rate hikes or a Japanese bond-market crash clearly isn't considering the deflationary currents coursing through the world's second-biggest economy. I'm not referring only to today's news that producer prices in China fell for a record-tying 31st month in September. Evidence is mounting that consumer prices are on a similar trajectory as exports wane, the nation's property slump deepens and consumers and businesses grow cautious.

China's darkening data raises new questions about Janet Yellen's efforts to wrap up the Fed's bond purchase program next month. It's looking like the global financial system will need all the liquidity it can muster, not less. That means the European Central Bank will have to give up fantasies of avoiding its own multiyear entanglement with quantitative easing. In all likelihood, Bank of Japan Governor Haruhiko Kuroda will have to persist in his ambitious yen-printing program.