Asia market update: The recent respite regarding US/Iran violence and pullback in gov’t bond yields have made Thurs. less volatile, thus far; 30-year JGB yields plummeted ahead of auction; Yen extends gain; Services PMIs improved.
General trend and developments
–Bessent may have spooked Yen traders: JPY has added onto Wed’s gains, which initially came after hawkish remarks from the BOJ’s Takata. Things, however, became even more cryptic during the NY afternoon when the US Treasury Sec stated, ‘I know what the Japanese are planning on doing.’ Recall, the next BOJ rate decision is scheduled for Sept 18th with Sept BoJ OIS now implying a 97.0% chance of a +25bp hike (vs. 92.5% from Tuesday). Markets, also, still remember the joint US/Japan FX intervention from late July. Japan may shift away from telegraphing intervention risks in advance and focus on hitting speculators, said a financial press article from early July. On the investment front, Berkshire may also raise its stakes in Japan’s trading co.‘s [Nikkei].
-Demand looked tepid at the 30-year JGB auction. The BTC ratio declined versus the prior auction, despite the MOF offering a yield of >4.07%, while the tail widened. Even still, JGBs have remained bid. Interestingly, Japan pension funds are said to favor domestic bonds by the largest margin since 2008, according to an asset manager’s survey. Prior press reports had noted, Japan’s govt is said to be aiming to “guide” 40% of household assets into stocks, investment trusts and bonds by 2040 (currently 25.0%). The 25/25/25/25 target mix of domestic and foreign bonds and equities have fueled additional speculation over allocation change amid GPIF’s unusual meeting reported today. Strong demand was seen at NZ bond auction following the RBNZ’s dovish rate hike on Wed. BTC ratios exceeded 4.0x.
-Traders are pondering the sharp rise in South Korea’s Aug FX reserves? The reserves had the largest m/m increase since the Bank of Korea started tracking the data back in 1971. The central bank attributed the rise to factors including the increase in foreign currency deposits. Interestingly, Hynix raised $29.4B in gross proceeds when it sold ADRs in NY [Jul 9th]. South Korea officials had previously suggested the proceeds from the Hynix IPO could eventually be supportive to the domestic FX market. Specifically, USD/KRW FX transactions related to the IPO were expected to occur around mid-July.
-Military developments related to Iran have been less prominent, thus far on today’s session. Trump reiterated the US is prepared to ‘do another attack [on Iran] at any time.’ Separately, US Secretary of Defense Hegseth may extend Middle East deployments into 2027, according to the WSJ.
-Meanwhile, the US is expected to continue to apply pressure on Iran and its partners by using economic sanctions. Earlier on Wed, US Treasury Sec Bessent issued a sanctions-related warning for maritime and digital assets, along with airlines. This was coupled with his prior warnings related to banks.
-During the opening of the Chinese markets, the PBOC set the yuan midpoint at 6.7807—the strongest level since 8th February 2023—amid expectations of further moderate appreciation against the USD, citing the Chinese Securities Journal. Adding to the positive tone, the August RatingDog Services PMI rose to 51.4, marking a 42nd consecutive month of expansion as new business growth accelerated. China Vice Premier Ding Xuexiang also highlighted strong prospects for a China-Russia Far East development cooperation, whilst Unitree Technology (688836.SH), which debuted at the CNY949 level on August 18th, has now stabilized to half of its share value at around CNY555.
-US equity FUTs -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 flat at 8,972.
-(NZ) New Zealand Q2 Terms of Trade Index Q/Q: -9.0% v -1.9%e.
-(AU) Australia July Trade Balance (A$): 1.9B v 1.5Be.
-(AU) Australia Aug Final Services PMI: 53.2 v 52.9 prelim (Confirms 3rd month of expansion).
-(AU) Australia sells A$100M vs. A$100M indicated in 2.00% Aug 2035 indexed bonds; Avg Yield: 2.759% v 2.5864% prior; bid to cover 4.89x v 4.64x prior.
-(AU) RBA launches a consultation on the role of RITS in supporting settlement in a tokenized ecosystem, open until October 30th, 2026.
-(AU) INGA.NL APRA [Australia regulator] raises ING Australia minimum liquidity requirements; Has imposed a A$50M operational risk capital add-on.
-(NZ) New Zealand Aug ANZ Commodity Price M/M: -0.4% v -4.0% prior.
-(NZ) New Zealand sells total NZ$450M vs. NZ$450M indicated in 2030 and 2037 bonds.
China/Hong Kong
-(CN) Shanghai Composite opens +0.3% at 3,953; (HK) Hang Seng opens +0.7% at 25,483.
-(CN) China Vice Premier Ding Xuexiang: Prospects for strengthening China-Russia far east development cooperation are broad and promising; Key to the unshakable China-Russia relationship amid the turbulent international situation lies in the leadership of the two heads of state – Xinhua.
-(CN) China Aug ratingdog services PMI: 51.4 V 50.6E (42nd month of expansion).
-(CN) China vows to protect firms through anti-monopoly enforcement.
-(CN) China’s yuan has strengthened against the US dollar this year, and market participants remain broadly optimistic about the currency’s prospects for “moderate” appreciation – China Securities Journal [citing industry experts in front-page article].
-(CN) China news update.
-(CN) BYTEDANCE.CN Receives $30B loan [marking Asia’s second-biggest loan this year] – US financial press.
-(CN) USD/CNY China PBOC sets the yuan mid-point at 6.7807 v 6.7829 prior (strongest level since February 8th, 2023).
-(CN) China PBOC Open Market Operation (OMO): Sells CNY0B in 7-day Reverse Repos; Net drains CNY103B v drains CNY599B prior.
-(HK) Hong Kong Aug PMI (whole economy): 49.5 v 51.0 prior (moves into contraction, after 3rd month of expansion).
-(HK) MOONSHOT.IPO Follow Up: Files confidentially for HK IPO – IFR.
Japan
-(JP) Nikkei 225 opens +0.6% at 64,725-(JP) Japan sells ¥600b vs. ¥600b indicated in 30-year JGB bonds; avg yield: 4.0790% v 3.9370%.
prior; bid-to-cover: 3.79x v 3.86x prior.
-(JP) USD/JPY Japan’s dollar/yen extends losses by -0.5% to 157.92.
-(JP) Treasury Sec Bessent: I know what the Japanese are planning on doing [US market close].
-(JP) Japan Aug Final Services PMI: 52.5 v 52.3 prelim (confirms 22nd month of expansion)-(JP) Japan FSA to inspect unrealized losses on JGBs; To survey Shinkin banks on JGB paper losses – Kyodo.
-(JP) Japan Chief Cab Sec Kihara: Not in position to comment on cabinet, LDP reshuffle.
-(JP) Japan’s 30-year JGB yield falls -10bps to 4.065%.
-(JP) Japan releases weekly flows data [period ended Aug 28th]: Foreign buying of Japan equities: +¥35.8B v -¥763.4B prior; Japan buying of foreign bonds: -¥824.0B v -¥1.98T prior.
-(JP) Shunichi Suzuki set to remain as LDP General Secretary – Yomiuri.
-(JP) GPIF’s unusual meeting fuels speculation over allocation change – US financial press.
-(JP) BoJ to hold meeting on market operations scheduled for October 14th, 2026.
-(JP) BRK.A CEO: May raise Japan trading house stakes – Nikkei.
Korea
-(KR) Kospi opens +1.3% at 6,650.
-(KR) South Korea Aug Foreign Reserves: $442.3B v $428.0B prior.
-(KR) South Korea Vice Fin Min Huh Chang: South Korea to merge four regional port authorities into one – Briefing.
-(KR) 035420.KR South Korea government picks Naver-led consortium for security-focused AI – Yonhap.
-(KR) 015760.KR South Korea to merge five KEPCO power generation units into one – US financial press.
Other Asia
-(IN) India Aug Final Services PMI: 54.1 v 54.5 prelim (confirms 61st month of expansion).
-(ID) Indonesia President Prabowo: Indonesia ready to further enhance cooperation with Russia.
-(SG) Singapore Aug Purchasing Managers Index (PMI): 51.5 v 51.4 prior [EU market close].
-(SG) Singapore Aug PMI (whole economy): 59.4 v 59.2 prior (19th month of expansion).
-(SG) Singapore: To defer the green levy for cargo shipments to Jan 2028.
-(TW) Taiwan Cabinet approves NT$607.6B (=>$19.0B) supplementary budget.
-(TW) Taiwan Cabinet is expected to approve >$19.0B extra budget – EDN.
-(TW) Taiwan Coast Guard: Fully monitored the movements of two Chinese coast guard vessels; Strongly condemns these actions.
-(TW) Taiwan sells NT$120B vs. NT$120B indicated in 1-year NCDs: Avg Yield: 1.643% v 1.626% prior; bid-to-cover: v 1.58x prior.
-(VN) Vietnam Aug CPI Y/Y: 4.9% v 4.7%e.
-(VN) Vietnam Aug Retail Sales Y/Y: 14.9% v 14.5% prior.
-(VN) Vietnam Aug Industrial Production Y/Y: 14.4% v 14.5% prior.
-(VN) Vietnam Aug Trade Balance: -$0.11B v -$1.0Be.
-(VN) Vietnam Aug Manufacturing PMI: 53.3 v 52.9 prior (14th month of expansion).
-(VN) Vietnam Finance Ministry sells total VND2.85T vs. VND17.0T target in 3-year, 5-year, 10-year, 15-year and 30-year bonds.
-(TH) Fitch Sr Director: Sees Thailand sovereign rating risks easing ahead of review; says there is more political stability and economic resilience.
-(TH) Thailand Central Bank Chief: Agree with any gold tax; Plans more measures to curb illicit funds; BOT to unveil framework to curb illicit flows on Sept 10th.
-(TH) Thailand sells THB20B vs THB20B indicated in 6-month bills: Avg Yield: 0.98565% v 0.94454% prior; bid-to-cover: 1.40x v 2.25x prior.
North America
-(US) Fed Beige Book: Economic activity increased modestly since early July; outlook for coming months was positive [US market close].
-(US) July final Durable Goods Orders: 1.1% v 1.1% prelim; durables (ex-transportation): 0.4% v 0.4% prelim [US market close].
-(US) Aug ADP monthly employment change: +38K V +47KE; “Among lower-paid workers in particular, base pay growth has lost momentum and now is slower than it was prior to the pandemic.” [US market close].
-(CA) Bank of Canada (BOC) leaves interest rates unchanged at 2.25%; as expected [US market close].
-(US) DOE CRUDE: -4.5M V -1ME; GASOLINE: -1.2M V -2ME; DISTILLATE: +0.8M V -1.5ME [US market close].
-(US) MBA Mortgage Applications w/e Aug 28th: +0.8% v -1.0% prior (1st rise in 3 weeks) [US market close].
-(US) Fed’s Williams (moderate, voter): Yields do not seem to be driven by inflation outlook; Not seeing second round inflation impact from tariffs [US market close].
-(MX) Mexico said to be beginning an anti-dumping investigation into Japanese steel sheets [US market close].
-(MX) Mexico’s Foreign Minister Roberto Velasco to visit China [September 7th, 2026].
-(US) White House: [Confirms] President Trump signed stopgap funding bill into law today.
-(US) Commerce Sec Lutnick: Further easing of US export curbs are not on the table; Relaxing tech export controls for China is ‘not necessary’.
-(US) PJM Interconnection extends level grid emergency alert to Sept 3rd amid heat wave.
-(US) Pennsylvania Health Department: 540 measles cases have been confirmed across 36 counties in Pennsylvania so far in 2026.
-(US) FBI: Investigating report that millions of American drivers’ licenses were exposed in a data breach.
-(US) Sean Parnell named as top contender for US Army Secretary – Semafor.
-(US) Acting AG Blanche: Will continue to fight for citizenship order – Fox News Interview.
-(US) President Trump: Going to Alaska to campaign for Dan Sullivan – “The President participates in a Rose Garden Dinner”, White House, Washington D.C.
Europe
-(RU) Russian Official: Russian air attack damages multi-story residential building in Ukraine’s Odesa.
-(RU) Russia Foreign Min Lavrov: Russia to close Germany’s Goethe institute branches.
-(IE) Ireland Aug Services PMI: 55.4 v 55.2 prior (4th month of expansion).
-(NO) Danske analyst on Nordic outlook.
Middle East
-(IR) Secretary of Defense Hegseth extends Middle East deployments into 2027; cites sources – WSJ.
-(IR) Sec State Rubio: The US will continue targeting Iran in light of shipping attacks [US market close].
-(SA) Reportedly the OPEC+ meeting on Sunday will not make any output policy decisions; Focus will stand on the markets – press [EU market close].
-(IR) Iran reiterates request for regional countries to stop letting U.S use their territory – press [EU market close].
-(IR) US Energy Sec Wright: 17M bpd flowed through Strait of Hormuz on Monday, largest flow since war began – CNBC [US market close].
-(IR) US escorted 40 commercial vessels through the Strait of Hormuz, on Tuesday [September 1st, 2026] – CNN.
-(KW) Kuwait Army: Currently responding to missile, drone threats.
Levels as of 01:20 ET
Nikkei 225 -0.8%; ASX 200 +0.3%; Hang Seng -0.6%; Shanghai Composite -0.2%; Kospi -1.2%.
Equity S&P500 Futures -0.1%; Nasdaq100 -0.1%; DAX -0.2%; FTSE100 -0.1%.
EUR 1.1601-1.1584; JPY 158.97-157.55; AUD 0.7173-0.7161; NZD 0.5870-0.5831.
Gold +0.9% at $4,425/oz; BTC -0.4% at $77,402; WTI Crude Oil -0.7% at $90.37/bbl; Copper -0.4% at $6.5823/lbs.
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