Asia market update: Most APAC gov’t bond yields extend gains amid Iran and CBs; NZ was the outlier on dovish RBNZ hike; Ueda and Takata remained hawkish; Bessent issued warning on CNY and Iran?; US ADP data and BOC in focus.
General trend and developments
– Yields, Iran and central banks have remained among the negative drivers of equities. The US 10-year Treasury yield rose its highest level since late-2023 to 4.8102%, while Japan’s 20-year yield climbed to its highest level since 1996 to 3.895%, showing potential for renewed negotiations in the bond/equity markets amid the 160.40-160.13 weakening yen.
– The US Nasdaq FUTs opened flat at 29,130 (v 29,142 prior) and the S&P 500 FUTs opened flat at 7,645 (v 7,647 prior). The WTI Crude FUTs opened +0.1% at $90.74/bbl (v $90.67/bbl prior), remaining above the $90/bbl level. This comes amid the US and Iranian military forces continuing their exchanges on Tuesday, but little has been seen in terms of material damage. Vessels continued to transit the Strait of Hormuz on Tues, although at a lower level vs. Monday. Additionally, US Treasury Sec Bessent noted that “17M barrels of crude oil” got out of the Strait of Hormuz yesterday, while Iran currently has only about “30M barrels of crude oil on water now”. [**TTN Note: Venezuela reported 1.17Mbpd of oil exports, of which 553Kbpd were exported to the US, following the newly arranged trade agreement reached over the August 30th weekend].
-US Treasury Secretary Bessent, also, commented on China at the G20. Specifically, he singled out the Yuan and Iran. China pays Iran in yuan and when yuan cannot be converted to dollars, Iran starves, according to the US Treasury Sec. Meanwhile, he reiterated that he expects to sanction another bank ‘soon’. That being said, the lack of an agreement on a G20 communique was not surprising. China was said to have concerns regarding the language on various topics [including the Strait of Hormuz, non-market economies and debt sustainability]. Therefore, the US released a G20 Chair statement instead of a communique following the backlash from China.
– Recall on Tuesday, it was reported that Bessent told Japan officials rate hikes are needed [NHK]. While those comments have not yet been confirmed, BOJ officials [Ueda and Takata] have remained hawkish as Sept rate hike expectations continue to lift. Meanwhile, Katayama reported a 30-minute discussion with Fed Chair Warsh, without providing any details, instead “monitoring debt market situations with extremely high sense of urgency”.
– Australia government 10-year bond yields have risen to 5.198%, its highest level since mid-2011. AUD/NZD has rallied on the RBNZ’s dovish rate hike. RBNZ Gov Breeman confirmed the central bank might need to take some time to assess the policy stance. Hence, 2-year NZ yields have declined on the remarks. In Australia, yields have again moved sharply higher amid the global trend. Aussie Q2 GDP also came in better than expected. Highlights of the data included EV sales.
– US equity FUTs -0.2% to -0.1% during Asia trading.
Looking ahead (Asian-weighted focus, using Asian time-zone)
– Wed Sep 2nd: KR Aug CPI, AU Q2 GDP & RBA Interest Rate Statement, NZ RBNZ Interest Rate Decision & Statement & Press Conference, (Wed night, US Aug ADP Nonfarm Employment Change, CA BoC Interest Rate Decision & Statement & Press Conference, RU July GDP & Retail Sales & Unemployment Rate).
– Thu Sep 3rd: Global S&P/HSBC Svcs PMI, AU July Trade Balance, CN Aug RatingDog Svcs PMI, VN Aug CPI & Retail Sales & Industrial Production & Trade Balance, JP 30-Year JGB Auction, MY Interest Rate Decision, EU July PPI, (Thu night, US July Trade Balance & Q2 Nonfarm Productivity & Q2 Unit Labor Costs, CA July Trade Balance & Q2 Labor Productivity, US Aug S&P/ISM Svcs/Composite PMI).
– Fri Sep 4th: KR/TW/HK/PH Aug FX Reserves – USD, JP July Household Spending, PH Aug CPI, SG July Retail Sales, EU July Retail Sales, (Fri night, US Aug Average Hourly Earnings & Nonfarm Payrolls & Unemployment Rate).
Holidays in Asia this week
-Mon Aug 31st: Malaysia, Philippines, Vietnam.
-Tue Sep 1st: Vietnam.
-Wed Sep 2nd: Vietnam.
Headlines/economic data
Australia/New Zealand
-(AU) ASX 200 opens -1.1% at 8,964.
-(AU) Australia Q2 GDP Q/Q: 0.4% V 0.3%E; Y/Y: 2.1% V 1.8%E.
-(AU) Australia government 10-year bond yields hit 5.198%, highest level since mid-2011.
-(NZ) New Zealand central bank (RBNZ) raises official cash rate (OCR) by 25BPS to 2.75%; as expected; notes the rate decision was made by ‘consensus’, all members agreed on the central projection for the OCR.
-(AU) Australia sells A$900M v A$900M indicated in 1.25% May 2032 bonds; Avg Yield: 4.8949% v 4.5209% prior; bid-to-cover: 4.21x v 5.61x prior
-(NZ) New Zealand July Building Permits M/M: -4.3% v -3.7% prior [3rd straight decline].
-(NZ) Auckland Aug Avg House Price M/M: -0.4% v -0.5% prior – Barfoot.
-(NZ) RBNZ Gov Breman: Expect economic growth to strengthen, broaden; economic recovery remains uneven; may need to take some time to assess policy stance – Post-Interest Rate Decision Press Conference.
-(NZ) RBNZ Monetary Policy Statement: sets the Dec 2026 OCR projection at 2.81% v 2.84% prior; sees the Sept 2029 OCR at 3.28%; the other OCR projections are generally inline with the priors.
China/Hong Kong
-(CN) Shanghai Composite opens -0.4% at 3,963; (HK) Hang Seng opens -0.2% at 25,281.
-(CN) China’s Finance Ministry (MOF) Issues statement on G20 meetings in US: Calls for ‘objective’ view of issue of global imbalances.
-(CN) WSJ Greg Ip: Why the world needs to force China Yuan to revalue – update from Aug 28th.
-(CN) China sells 30-Year Additional Bonds.
-(CN) China sells 3-month and 6-month bills.
-(CN) China PBOC sets the yuan mid-point at 6.7829 v 6.7809 prior.
-(CN) China PBOC Open Market Operation (OMO): Sells CNY0B in 7-day Reverse Repos; Net drains CNY599B v drains CNY469B prior.
-(HK) 1.HK Panama canal projects 10.75K high-draft vessel transits for FY27 – Statement.
Japan
-(JP) Nikkei 225 opens -1.5% at 65,195.
-(JP) Bank of Japan (BoJ) Governor Ueda: Discussed with central banks need to communication for appropriate monetary policy to achieve price stability as global environment changes – Press conference at G20 Finance Ministers & Central Bank Governors Meeting.
-(JP) Japan July Monetary Base End of Period: ¥543.8T v ¥557.6T prior; Y/Y: -15.7% v -13.8% prior.
-(JP) Japanese Fin Min Katayama: Held talks with FRB Chief; G20 discussed global imbalance, emerging country debt, financial literacy – Press conference at G20 Finance Ministers & Central Bank Governors Meeting.
-(JP) BoJ Board Member Takata [hawkish dissenter at the Jun 2026 & Sep 2025 rate decision]: Believe BoJ needs to conduct rate hikes nimbly after gauging the degree of accommodation in domestic financial conditions, in addition to examining developments overseas – Sapporo City Financial and Economic Roundtable, Japan.
-(JP) BOJ Outright Bond Purchase Operation for <1 Year; 3~5 Years; 10~25 Years; (Inline with planned amounts for Q3, 2026).
-(JP) Bank of Japan (BOJ) Results related to today’s outright bond buying operations.
Korea
-(KR) Kospi opens -3.1% at 6,625.
-(KR) South Korea AUG CPI M/M: 0.2% V 0.4%E; Y/Y: 3.1% V 3.2%E.
-(KR) South Korea Ministry: South Korea, Japan agrees to deepen energy, critical minerals and carbon rules cooperation.
-(KR) TTN Summary BOK-CEPR-OECD Conference Day 1: BOK: Bank of Korea Governor says demographic transition will materially shape productivity, potential growth and long-term equilibrium interest rates, with Korea foreshadowing challenges other countries may face.
-(KR) Bank of Korea sells KRW300B in 1-year Monetary Stabilization Bonds (MSB); Avg Yield: 3.430% v 3.350% prior.
Other Asia
-(SG) MAS September Survey of Professional Forecasters: 45% of respondents anticipate monetary policy tightening in October 2026 through an increase of the slope of the S$NEER policy band, up from 30% in the previous survey, with the rest of the respondents expecting no change to the slope of the policy band.
-(IN) India ‘diaspora’ flows are now >$100B – Local Press [update].
-(TH) Thailand sells total THB40B in 2036 and 2050 bonds.
North America
-(US) US 10-year treasury yield rises to 4.8102%, highest level since late-2023; Japan 20-year yield rises to 3.895%, highest level since 1996.
-(US) US Treasury: [Confirms] China objected to G20 statement on Strait of Hormuz.
-(US) Treasury Sec Bessent: Had hoped to announce a unanimous joint G20 communique; Issuing a Chair statement reflecting 19 of the G20; China dissented – Press conference at G20 Finance Ministers & Central Bank Governors Meeting.
-(US) July JOLTS job openings: 7.271M V 7.313ME [US market close].
-(US) Aug final S&P Manufacturing PMI: 53.9 V 53.4E [US market close].
-(US) Aug ISM Manufacturing: 54.6 V 55.2E [US market close].
-(US) Atlanta Fed GDP Now: Raises Q3 GDP estimate from 4.6% to 4.8% [US market close].
-US) Fed’s Barr (voter): If inflation does not moderate soon then the Fed should raise rates; If data trends give confidence that inflation is moderating on path to 2% target, then we can take time to assess policy stance [US market close].
-(US) House bill providing stopgap funding through Dec 11th passes on a bipartisan basis, averting a govt shutdown on Oct 1st – press [US market close].
-(US) House Republicans propose bill to overhaul CFPB; Bill would fund CFPB through Congress – Politico [US market close].
-(US) Weekly API Crude Oil Inventories: -2.6M v +4.2M prior.
-(US) G20 Chair’s Statement: Urges countries to avoid unnecessary export restrictions to ensure supply chains function normally.
-(US) US State Department: Working with congress, department intends to provide $60M to help Pacific Islands countries address ongoing global energy crisis.
-(US) US Energy Sec Wright: 17M barrels of oil transited the Strait of Hormuz on Monday.
-(US) Pres. Trump: Very productive and positive conversations were had today at the G20 Finance Ministers Meeting in As… – post on Truth Social.
-(US) Pres. Trump: I am pleased to nominate a true WARRIOR, Hung Cao, to become the next Secretary of the Navy. We need… – post on Truth Social.
-(US) US Energy Department issues order for Orlando Utilities Commission coal plant unit to remain available to operate.
-(US) DELL Reports Q2 $7.04 v $4.95e, Rev $47.0B v $45.3Be; Raises FY27 outlook [US market close].
-(US) ANTHROPIC.IPO Introduces Claude Fable 5.1 and Mythos 5.1; Says its new Fable 5.1 AI model is cheaper and better at coding – press [US market close].
-(VE) US Official: We’re in the process of creating ‘a democratic Venezuela;’ US oil agreement is related to democracy in Venezuela [US market close].
-(VE) Venezuela’s Aug total oil exports: ‘Almost unchanged’ at 1.17Mbpd; Venezuela’s oil exports to the US: 553Kbpd – Shipping Data.
-(PE) Peru said to ‘break off’ diplomatic relations with Iran, cites the Strait of Hormuz – US financial press.
-(AR) Argentina Aug Government Tax Revenue: 20.5T v 23.0T prior.
-(CL) Chile widens pension funds investment flexibility in final rules – Press.
Europe
-(EU) Eurozone aug preliminary advance CPI estimate Y/Y: 3.3% V 3.3%E; CPI coreY/Y: 2.4% V 2.5%E [EU market close].
-(EU) Eurozone July unemployment rate: 6.4% V 6.3%E [EU market close].
-(EU) Eurozone Aug final Manufacturing PMI: 52.7 V 52.8 PRELIM (confirms 7th month of expansion and highest since May 2022) [EU market close].
-(EU) ECB’s Nagel (Germany): Global economy remains on growth path despite Middle East crisis; Not seeing second round effects on inflation – G20 comments [EU market close].
-(EU) ECB Maklouf (Ireland) said the central bank must be prepared to raise interest rates further – FT.
-(RU) Russia Fin Min Siluanov reiterates sees grounds to develop financial ties with the US, despite complications now – Interfax.
-(RU) Russia’s Deputy Foreign Minister Grushko: No grounds for the Black Sea grain initiative to resume.
Middle East
-(IR) CENTCOM: US forces complete strikes on IRGC targets on September 1st, 2026; The strikes follow recent attempted attacks by the IRGC against commercial shipping in the Strait of Hormuz and against American service members – post on X.
-(IR) IRGC: Iran has begun retaliatory attacks against the US; US actions will only ‘tighten the lock’ on the Strait of Hormuz [US market close].
-(IR) Reportedly two Oil supertankers hit by projectiles in Strait of Hormuz – Press (citing maritime risk consultancy Marisks) [EU market close].
-(IR) Pres. Trump: Confirms US strikes on Iran near the Strait of Hormuz due to Iran’s ‘failed attempt at adding sea mines to the Strait;’ Threatens greater strikes if Iran retaliates – Truth Social [US market close].
-(IR) IRGC: Claims to have ‘killed a large number of US forces;’ US has not responded to claims [US market close].
-(IR) [Confirms] IRGC launches missile attack on US air base in Jordan – IRIB.
-(IR) Commodity vessels transiting via Strait of Hormuz 4 commodity vessels v 10 commodity vessels prior, remaining below the 10-day average [13 commodity vessels] – US financial press.
-(IR) Pres. Trump: I’m not trying to force Iran to the bargaining table, as ABC Fake News reported. I couldn’t care les… – post on Truth Social.
-(IR) Bahrain Interior Ministry issued alert of potential threat, urges citizens, residents to remain calm and move to the nearest safe location.
-(IR) US Officials refute IRGC’s earlier claims that US forces incurred heavy casualties – press.
-(KW) Kuwaiti Army: Kuwait air defenses currently responding to hostile drone attacks following Iranian attack.
-(IL) Israeli Military: Sirens warning of hostile aircraft infiltration sounded in Kfar Yuval [timing uncertain].
Levels as of 01:20 ET
Nikkei 225 -2.8%; ASX 200 -1.0%; Hang Seng -1.0%; Shanghai Composite -0.9%; Kospi -3.4%.
Equity S&P500 Futures -0.1%; Nasdaq100 -0.2%; DAX -0.5%; FTSE100 -0.5%.
EUR 1.1597-1.1574; JPY 160.40-159.95; AUD 0.7153-0.7131; NZD 0.5900-0.5826.
Gold -0.4% at $4,309/oz; BTC -1.9% at $77,729; WTI Crude Oil +0.4% at $90.54/bbl; Copper flat at $6.5365/lbs.
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