Asian TECH and government bonds rally on UST’s ‘mini QE'

Asia Market Update: Asian TECH and government bonds rally on UST’s ‘mini QE’; Aussie jobs figures validate on-hold stance by the RBA; Alibaba figures due later on Thurs; US/Canada trade details continue to trickle out ahead of final deal.

General trend and developments

- Technology shares and Nasdaq FUTs have rallied across Asia thanks to Mr Bessent’s UST buyback announcement [The US Treasury announced it will at least double the size of its liquidity-support buybacks for longer-dated nominal Treasuries (10- to 30-year sectors) to a minimum of $4 billion per operation starting September 9th, 2026.] Recall, higher bond yields were one of the recently cited headwinds for high valuation tech shares. Shareholder returns news for Hynix and Samsung has, also, been supportive for markets. The latter is also said to have raised prices by up to 15% [reminder from Jul 5th: Samsung said to seek to raise DRAM prices by up to 20% in Q3 q/q]

- Naturally, JGBs and other Asian government bonds have been helped by Bessent. Investors were already buying 20-year Japanese government bonds before the auction, as yields plummeted in early trade. Nonetheless, demand at the 20-year JGB auction ended up being mixed. Even still, the 20-year JGB yield has remained lower as of the time of writing [-8bps]

- In emerging markets, the US Treasury’s announcement helped drive Indonesia yields sharply lower by 20bps. Overnight, Indonesia’s central bank (BI) left the BI Rate unchanged at 5.75% for a second consecutive meeting under its current tightening stance—the first policy decision under Governor Damayanti—while also holding the deposit and lending facility rates steady. The pause comes after BI’s 50 bp May hike and a surprise intra-meeting hike in early June that had been driven by earlier EEM currency pressure as the dollar strengthened, along with the Iran war and higher oil prices. The market has, perhaps, done some of the heavy lifting for BI. With the US Dollar Index (DXY) now near or at two-month (roughly nine-week) lows, the weaker dollar has eased those pressures and underpinned the more constructive backdrop that allowed the central bank to pause. Indonesia’s interest rate policy is highly sensitive to US Fed moves.

- The US July FOMC minutes showed most participants favored holding rates steady, though several preferred a hike, with inflation risks judged skewed to the upside and higher rates likely needed if inflation fails to ease.

- There were no material developments from Iran today. The expiry of the 60-day memorandum of understanding has triggered a series of reciprocal measures that could either de-escalate or intensify the standoff. Hence, earlier today US President Trump confirmed the prior economic sanctions threat against Iran. Trump, specifically, announced what he characterized as the “most crushing economic operation ever taken against any country.” This announcement coincides with the UAE’s suspension of all trade, commercial exchanges and financial transactions with Iran, accelerating expectations of comprehensive economic isolation. Recall on Aug 13th, US Treasury Secretary Bessent indicated that measures “never seen before” would be deployed to isolate Iran economically.

- Weaker Aussie payrolls figures have had only a tepid impact on markets, as the data gave the RBA another reason to extend its rate pause. Further, the details of the data were mixed, as full-time employment continued to rise in Jul. The prior payrolls figure was, also, revised up. Even still, inflation remains a concern, as evidenced by expectations data [Australia Aug Consumer Inflation Expectation: 4.9% v 4.7% prior]

- Japan trade data supported by FX and AI: Japan’s Jul trade data provided a positive surprise, especially, after the weaker Q2 prelim GDP data [released on Mon]. Supportive factors for the trade data included the weaker Yen, auto and chip exports. Shipments to China rose by 25.8% y/y alone. Exports overall, rose for the 11th straight month and at the fastest pace since 2022.

- US/Canada trade details continue to trickle out ahead of final deal. Canadian provinces are said to consider easing the alcohol-related ban on the US. Meanwhile, the US is expected to reduce tariffs on Canadian metals and autos. The latter has been seen as a positive for Japanese automakers

- Unitree’s [688836.CN] shares have seen a slight pullback (~5%) after rallying by >600% in Wednesday’s Shanghai debut. Recent comments out of the co’s CEO have garnered some attention [see below]. Perhaps, the decline in the co’s shares has benefited the Shanghai market overall, thus far on Thursday. Recall, mainland Chinese equity markets declined sharply on Wed, as investors elected to load up on Unitree’s shares.

- Bitcoin surged more than 5% to its highest level since early June as the White House hosted a crypto summit with fintech CEOs. (Note: The U.S. Senate has scheduled a vote on the Clarity Act, a cryptocurrency bill, for September 15.).

- Alibaba Group will announce its June 2026 quarterly results on August 20, 2026.

-US equity FUTs +0.1% to +0.3% during Asia trading.

Looking ahead (Asian-weighted focus, using Asian time-zone)

-Fri Aug 21st: KR July PPI, NZ July Trade Balance, AU Prelim Aug S&P Mnfg PMI, JP July National CPI & Core CPI, JP Prelim Aug S&P Mnfg/Svcs PMI, (Fri night: Global S&P PMIs).

Holidays in Asia this week

-Fri Aug 21st: Philippines.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens -0.5% at 9,100.

-(AU) AUSTRALIA JULY EMPLOYMENT CHANGE: -15.8K V +12.0KE; UNEMPLOYMENT RATE: 4.5% V 4.4%E.

-(AU) Australia Aug Consumer Inflation Expectation: 4.9% v 4.7% prior.

-(AU) Australia sells A$100M v A$100M indicated in 0.25% Nov 2032 Indexed Bonds: Avg Yield 2.3319% v 2.1808% prior: bid-to-cover: 6.05x v 3.23x prior.

-(AU) FMG.AU Reports FY Net $2.87B, -15% y/y, Underlying EBITDA $8.64 v $7.9B y/y, Rev $16.97B v $15.5B y/y; affirms FY27 production guidance.

-(NZ) New Zealand sells total NZ$450M vs. NZ$450M indicated in 2032 and 2035 bonds.

China/Hong Kong

-(CN) Shanghai Composite opens +0.3% at 3,907; (HK) Hang Seng opens +1.1% at 25,779.

-(CN) CHINA CENTRAL BANK (PBOC) 1-YEAR AND 5-YEAR LOAN PRIME SETTING: LEAVES BOTH LPR RATES UNCHANGED; AS EXPECTED.

-(CN) China Commerce Ministry (MOFCOM): China's consumer market has maintained a trend of new and optimized development so far.

-(CN) China July Swift Global Payments (CNY): 3.1% v 3.1% prior.

-(CN) China technology bond issuance to hit CNY2.6T in 2026 – Chinese press.

-(CN) 688836.CN Follow up: Shares open down -7% following yesterday's debut on the Shanghai Stock Exchange's Star Market.

-(CN) China PBOC sets the yuan mid-point at 6.7808 v 6.7854 prior (strongest level since February 8th, 2026).

-(CN) China PBOC Open Market Operation (OMO): Sells CNY0B in 7-day Reverse Repos; Net drains CNY327B v drains CNY142B prior (eighth straight nil injection, ninth time since 2020).

-(HK) 1.HK Follow up: Commences international arbitration against Panama on Aug 20th, 2026; Seeks >$1.5B from Panama in arbitration.

Japan

-(JP) Nikkei 225 opens +0.6% at 65,729.

-(JP) JAPAN JULY TRADE BALANCE: -¥634.5B V -¥649.0BE.

-(JP) JAPAN SELLS ¥700B VS. ¥700B INDICATED IN 20-YEAR JGB BONDS; AVG YIELD: 3.6980% V 3.6260% PRIOR; BID-TO-COVER: 3.98X V 4.52X PRIOR.

-(JP) Japan's Ministry of Economy, Trade and Industry (METI) seeks ¥7.7T in FY27 budget - Nikkei.

-(JP) Japan considers tax incentives for retail JGB investors - Nikkei.

-(JP) Japan JGBs supported by UST buyback announcement, [particularly the longer-end]: Japan 10-year bond yield falls -5bps to 2.84%; Japan 20-year bond yield falls -7.5bps to 3.700%; Japan 30-year bond yield falls -9.5bps to 3.985%.

-(JP) Japan medium-term notes have largest foreign outflow since 2006; cites data from the Japan Securities Dealers Association (JSDA) – US financial; press [update].

-(JP) Japan releases weekly flows data [period ended Aug 14th]: Foreign buying of Japan equities: +¥621.2B v -¥368.6B prior; Japan buying of foreign bonds: ¥1.14T v ¥1.64T prior.

Korea

-(KR) Kospi opens +3.2% at 6,680.

-(KR) South Korea Defense Minister: Will roll out voluntary mandatory military service (conscription) system next year.

-(KR) South Korea Q2 Short-Term External Debt: $198.5B v $183.6B prior.

-(KR) Korea Exchange activates sidecar following Kospi 200 FUTs rising by +5%, programme trading halted for five-minutes.

-(KR) 000660.KR To buy back KRW40T (~$28.6B) in treasury shares during 3 months from Aug 20th (3.3% of issued shares); To fully cancel those shares; Notes fixed dividends and special dividends also under consideration.

-(KR) 005930.KR Said to have hiked chipmaking prices by up to 15% for new orders; Chinese, US SF4 customers face 10-15% price increases from previous month - press [EU market close].

Other Asia

-(ID) Indonesia Central Bank (BI) left the BI Rate unchanged at 5.75% (as expected) [EU market close].

-(IN) India Central Bank (RBI) Gov Malhotra: RBI's net short dollar position 'manageable'; Rupee exchange rate remains market determined; RBI policy still to curb excessive volatility - Financial Express.

-(TW) Taiwan Government: 2027 proposed defense spending NT$1.1T [the proposed overall budget is NT$3.6T].

-(MY) Malaysia July Trade Balance (MYR): 22.5B v 21.1Be.

-(ID) Indonesia 5-year yield falls -20bps to lowest in over two months.

-(IN) India Central Bank (RBI) said to be likely selling USD through state-run banks – traders.

North America

-(US) FOMC JULY MINUTES: Participants judged inflation risks were skewed to upside; Many participants assessed higher rates would likely be necessary if inflation did not fall [US market close].

-(US) US Treasury increasing, by at least double, the size of liquidity support buyback operations for longer-dated nominal coupon securities (the 10-year to 20-year sector and the 20-year to 30-year sector; effective Sept 9th – statement [US market close].

-(US) US Pres Trump: US has discussed plans to accumulate sizable amounts of Bitcoin and other cryptocurrencies; We will probably have a deal with Canada that will be good for everybody [US market close].

-(US) DOE CRUDE: +4.4M V -0.5ME; GASOLINE: +0.7M V -1.0ME; DISTILLATE: -1.5M V -1.0ME [US market close].

-(US) US national debt passed $40T milestone today.

-(US) Trump confirms he will attend the GOP midterm convention on Sept 9-10th.

-(US) White House's Legislative Affairs Director James Braid to leave for the private sector - punchbowl.

-(US) US Army to phase out new drone-assault battalion - WSJ.

-(US) NBIS Prices $5B convertible senior notes due 2030 and 2034; $4.94B net proceeds expected.

-(US) Sec of State Rubio to meet with Canadian Foreign Minister at 1:30pm ET on Thursday.

-(CA) Canada Intl Trade Min Leblanc: Deal with US will keep the supply management agricultural system intact; We're still finalizing the deal's text [US market close].

-(CA) Canada Intl Trade Min Leblanc: Prime Minister updated Canada's Premiers on discussions with the United States; Carney and Premiers had a constructive and important conversation [today].

-(CA) Further press circulation that US Canada trade deal will reportedly drop auto tariffs from 25% to 15%; Deal has not been finalized - press.

-(CA) Nova Scotia Premier: [Canada PM] Carney asked provinces to end US booze ban.

-(CO) Colombia signs decree declaring economic emergency [as expected].

-(AR) Argentina July UTDT Leading Indicator: -0.7% v -0.1% prior.

Europe

-(EU) Euro Zone July Final CPI Y/Y: 2.9% v 2.9% prelim; CPI Core Y/Y: 2.5% v 2.5% prelim [EU market close].

-(UK) July CPI M/M: 0.3% v 0.3%e; Y/Y: 2.9% v 2.9%e; CPI Core Y/Y: 3.4% v 2.5%e [EU market close].

-(EU) ECB Chief Lagarde stated that the region could not afford to miss out on AI revolution [EU market close].

-(EU) ECB's Rehn (Finland) stated that saw no clear signs of second-round effects. Wage growth and outlook remain moderate. Essential to anchor inflation expectations [EU market close].

-(EU) Euro Zone Jun Current Account Balance: €35.1B v €25.8B prior [EU market close].

-(EU) Euro Zone Q2 Preliminary Labor Costs Y/Y: 3.1% v 3.2% prior [EU market close].

-(UK) July PPI Input M/M: -1.7% v 0.0%e; Y/Y: 4.9% v 6.5%e [EU market close].

-(UK) July PPI Output M/M:0.2 % v 0.2%e; Y/Y: 3.1% v 3.2%e [EU market close].

-(UK) July RPI M/M: %0.6 v 0.8%e; Y/Y: 3.2% v 3.3%e; RPI-X (ex-mortgage interest payments) Y/Y: 3.1% v 2.9% prior; Retail Price Index: 419.1 v 419.7e [EU market close].

-(UK) Jun ONS House Price Index Y/Y: 2.0 % v 3.0% prior [EU market close].

-(RU) Russia Dep PM Novak: Russia has begun to import fuel; We anticipate several refineries to become operational soon following drone-related damage repairs [EU market close].

-(IT) Italy Jun Current Account: €5.8B v €0.6B prior [EU market close].

-(CH) Swiss Q2 Industrial Output Y/Y: +5.5% v -7.6% prior; Industry & Construction Output Y/Y: +5.1% v -6.6% prior [EU market close].

-(AT) Austria July Final CPI M/M: 0.0% v -0.1% prelim; Y/Y: 2.8% v 2.7% prelim [EU market close].

-(ZA) South Africa July CPI M/M: 0.2% v 0.4%e; Y/Y: 4.3% v 4.5%e [EU market close].

-(NL) Netherlands July Unemployment Rate: 4.0% v 3.8% prior.

Middle East

-(IR) Pres. Trump: No one has given the Islamic Republic of Iran a greater opportunity to make a Deal than me. TRAGICALLY... - post on Truth Social.

-(IR) US said to be conducting covert operation to transport oil through the Strait of Hormuz using the southern route on the Oman coast - Axios citing two US Officials [US market close].

-(IR) Hormuz shipping traffic shows no uptick, commodity vessel transits at Hormuz totaled 9 on Wed; cites shipping data - financial press.

Levels as of 01:20 ET

Nikkei 225 +1.3%; ASX 200 +0.2%; Hang Seng +1.3%; Shanghai Composite +0.3%; Kospi +5.8%.

Equity S&P500 Futures +0.1%; Nasdaq100 +0.3%; DAX -0.1%; FTSE100 flat.

EUR 1.1684-1.1670; JPY 158.64-158.03; AUD 0.7129-0.7103; NZD 0.5958-0.5922.

Gold -0.9% at $4,485/oz; BTC +8.2% at $69,564; WTI Crude Oil flat at $84.41/bbl; Copper -0.4% at $6.4808/lbs.