Asia opens: Flickers, not flames

Asia walked into Tuesday not with the roar of a new week, but with the kind of tentative flicker you get when a pilot light tries to hold against a draft. Alibaba’s rally over the past session gave the region a spark, but it’s not enough to turn the mood into a blaze. Japan’s Nikkei, dragged lower by chip stocks Monday, now leans toward recovery in futures, but it looks like a sprinter tripping on the first step—there’s motion, but the stumble still shows. Hong Kong and Australia are pencilling in modest moves, and the U.S., coming off its Labour Day pause, sits heavy in futures, shading lower as if already bracing for what’s ahead.

The real test for Asia today isn’t equities—it’s in the bond pit. Japan’s 10-year auction is less a routine sale and more a stress test of global conviction. With the BOJ edging closer to rate normalization chatter, and political currents stirring at home, demand for JGBs will be watched across every macro desk from Singapore to London. A weak bid would echo into Treasuries and Bunds, at a time when global fixed income already feels unloved.

Oil continues its grind higher, moving less like a rocket and more like a tide that won’t recede. Traders know a supply glut is building offshore, yet the tape won’t back down. India continues to import Russian barrels in defiance of Washington, while Ukraine keeps striking refineries, making the crude market feel like a geopolitical fault line more than a commodity screen. Every uptick is a reminder: this isn’t about barrels in Cushing, it’s about politics at scale.

Wall Street, meanwhile, is staring down September’s gauntlet. The rally to record highs has been the easy part. Now come the landmines: payrolls, inflation, and the Fed’s September call—all hitting in the next three weeks. Layer on tariff risk and the not-so-subtle questions about Fed independence, and the month starts to look like glass: it holds firm until one sharp shock splinters the whole surface. Futures are now pricing over 140 basis points of cuts through 2026—recessionary medicine prescribed before the patient has even keeled over. The hurdle to derail a September cut is high, but payrolls will dictate the sequence of October and December’s dominoes.

Emerging markets are flashing stress in their own right. Indonesia took its sharpest equity fall in nearly five months Monday, political unrest over living costs shaking confidence and pushing President Prabowo to cancel a planned trip to Beijing. Bonds sold off too, 10-year yields pushing to three-week highs—reminding everyone that EM risk rarely stays siloed. Currency, equity, and credit stress tend to bleed into one another, and this tape feels no different.

Gold, the perennial mirror of anxiety, inches ever closer to record highs. The narrative is straightforward: markets are leaning into the Fed easing cycle. But gold isn’t waiting for confirmation—it’s moving ahead of NFP, daring payrolls to prove it wrong. If jobs confirm the cut path, bullion could break decisively; if not, it risks a sharp reversal. Either way, the metal is a referendum on how seriously traders take the Fed’s coming pivot.

Europe’s opening tone is unlikely to be much steadier. With a week until France’s confidence vote, political risk is hanging in the air, though the OAT-Bund spread sits steady just below the August peak. The euro clings above 1.17, buoyed less by conviction in Europe and more by the dollar's softness. Traders are essentially betting French politics won’t metastasize beyond its borders—a fragile assumption in a continent where shocks rarely stay contained.

And then there’s the global bond market—September’s perennial punching bag. This has always been the cruellest month for duration, but this year the test is brutal. Supply is heavy, appetite is light, and the narrative has shifted from “buy every dip” to “don’t touch the long end.” If payrolls force the Fed into sharper cuts, the curve will steepen violently: the front end rallies, the long end buckles. Inflation ghosts may look faint, but they’re still enough to keep buyers at bay. It’s not just Treasuries—sovereign longs are unloved everywhere.

So the Asia open sets the tone: flickers, not flames. Markets are cautious, defensive, and bracing for the gauntlet ahead. The world is stepping into September not with confidence, but with the careful tread of traders who know this month has a habit of turning routine positioning into battlefield chaos.