Asia open: Asia drinks from the Fed’s cup, while Japan revels in US tariff clarity

Asian markets opened Tuesday with momentum, riding Wall Street’s conviction that Fed cuts are no longer a question of if but how many. Nearly three reductions are now being priced before year-end. That expectation is washing through global markets like a spring tide — reminding everyone that in this tape, liquidity still outranks fundamentals.

Tokyo grabbed an extra gust of wind. Trade negotiator Ryosei Akazawa confirmed the U.S. will lower tariffs on Japanese goods — autos front and center — by September 16. Trump’s executive order locked it into the Federal Register, clearing months of fog over a policy overhang that had kept Japan’s exporters guessing. For Japan, this isn’t a modest adjustment — it’s oxygen. Autos are the muscle of the economy, and tariff clarity drops into Japan Inc.’s veins like an adrenaline shot.

Equity desks now see a cleaner glide path for Japanese automakers, while FX desks pick up a new positive beat in the yen’s story. A U.S. cutting tariffs and cutting rates at the same time sharpens the case for a currency that can ride the liquidity tide, even as Tokyo’s succession politics keep a bit of suspense in the backdrop.

Across Asia, the mix is intoxicating. A softer dollar plus Fed easing is the “boost juice” of regional rallies — the same cocktail that once turned every carry trade into a bottomless glass. Asia has always thrived when U.S. liquidity swells, and this wave looks no different — a broad swell capable of lifting every emerging-market boat from Kuala Lumpur to Seoul.

When the dollar retreats against the G10, Asia FX usually seizes the chance to firm, making regional assets more attractive once adjusted for currency. Layer on the fact that U.S. equities are trading at nosebleed valuations, and it’s no wonder global allocators are scouting cheaper ports. For some, the pivot into Asia isn’t about juicing yield — it’s about ballast, balance, and getting ahead of the moment when the U.S. story begins to creak under its own weight.

The US market’s September riddle: Champagne or hangover?

Wall Street has been acting like a runner who thinks the finish line keeps moving further away—it doesn’t matter how many new records it clocks, the legs just keep churning. Twenty-plus all-time highs this year and counting, yet every trader knows the real hurdle isn’t behind us—it’s standing right in the middle of September’s track: the Fed cut.

Here’s the rub: the Fed cut is also a mirror. For the “buy the rumor, sell the news” crowd, this is precisely the setup you wait years for. September has always had a mean streak—think of it as the cruel month that calls in everyone’s margin tab. Retail flows shrink, corporates lock the treasury chest ahead of earnings, and pensions rebalance like bouncers kicking latecomers out of the club. Add in the seasonality curse—statistically the weakest month of the year—and you can almost hear the computers pre-programming “fade the pop” instructions.

Yet this tape isn’t rolling over. It’s too sticky, too buoyant. The market feels like a balloon tethered to a chair: every attempt to push it down just makes it bounce back higher. That’s because when the Fed cuts rates outside of a recession, September’s ghost loses some of its bite. On average, history says the month is down—but in those rare “insurance cut” years, the market actually ekes out gains. So the riddle is simple but brutal: is this one of those years where the cut rescues September, or the year where everyone’s already drunk on easy money and wakes up to a hangover?

Meanwhile, traders should think in terms of setups, not sermons. If you’re playing defence, the volatile market offers cheap insurance—VIX call spreads and VXX longs are basically storm shutters for your book. If you’re running offence, dips may be your friend, because this tape hasn’t cracked despite tariffs, labour softness, and corporate buyback droughts. Gold, too, deserves a nod. With the dollar wobbling on a Fed-cutting path, bullion shines brightest when policy credibility looks stretched, and right now, that glint is hard to ignore.

The broader truth is that this market is acting like a house with too many support beams: even as old ones crack—trade war, stagflation, tariffs—new props appear, whether AI earnings, global liquidity, or sheer momentum. The Fed's cut on September 17 will decide whether those beams are reinforced with steel or whether traders discover they’ve been leaning on plywood all along.

In short, the tape is giving us two faces: champagne in Asia, suspicion in New York. The question every trader must answer: Are you drinking from the punch bowl, or quietly slipping out before the hangover hits?