Bonds and currencies cheer on prospective US-Iran deal

Asia market update: Risk Assets, Bonds & Currencies cheer on prospective US-Iran deal + Liquidity relief post-SpaceX IPO; US enforced rollback of Fable 5 AI contained to Anthropic, for now...; CB week, RBA/BOJ tomorrow.

General trend and developments

- Optimism on US-Iran as markets took the news of the MoU to be signed on June 19th as a defacto peace deal.

- Crude oil fell -4.5%, briefly touching $80 handle, US equity FUTs +1.2% at the open; Nikkei +5% to break past 69,000 for the first time, Kospi +5% with green equities throughout Asia today, liquidity relief no doubt assisted by SpaceX safely getting its record $1.8T IPO away - which included a lot of Asian equity investors. Philippines bourse back to March 6th levels.

- Bonds fell around the world, with 10-year benchmarks in US, Japan, India down -6bp to -5bp (US 10-years at a one-month low).

- Officially, US and Iranian representatives agreed to sign a draft MoU this Friday in Switzerland, June 19th, in a deal much-touted by Pres Trump, however still plenty of pitfalls over the next 60-days of negotiations. Terms to confirm include a Friday, June 19th reopening of the Strait of Hormuz with no tolls, while some representatives out of Tehran said that the draft memorandum says Iran agrees that it will neither produce nor acquire nuclear weapons (with the highly enriched uranium stockpile to be diluted inside Iran, mechanism to be discussed in next 60 days), but Iran’s Dep Foreign Min said only that “Nuclear issues to be discussed during 60-day negotiations”. Iran also claimed the US as agreeing to release $25B of Iran’s frozen assets.

- Time will tell whether anything has really changed, other than the Hormuz opening soon, with the devil in the details of the coming 60-days of negotiations. Three scenarios still possible at the end of 60 days or earlier: US caves, or Iran caves, or neither side caves - leaving the chance of further kinetic action still open.
(**TTN Note: Video over the weekend from several Iranian cities shows strong opposition from IRGC hardliners and their supporters seeing any US-Iran agreement as a “disgraceful surrender”. While Pres Trump also said US to resume Iran strikes if can’t reach nuclear accord].

- The AI world was all abuzz over the weekend from the drama of Anthropic having the US govt suspend all access to its Fable 5 / Mythos AI models by any foreign national, effectively meaning Anthropic had to disable its top AI models to all customers. White House reports later said that export limits on Anthropic were due to govt concerns about Chinese access while AI Czar David Sacks wrote that speaking to govt and tech industry insiders he believed the story was that the US govt had asked CEO Dario to fix a recently discovered jailbreak vulnerability or de-deploy the model. Dario said to have refused - surprisingly in Sacks' view - since Anthropic itself had been promoting the idea Mythos was a potential cyberweapon (hence its own Project Glasswing giving highly restricted access to Mythos back in April) and its own repeated warnings and calls for govt regulation as safety is in its view “the top priority”. Sacks said the ball is therefore in Anthropic’s court.

- Reportedly US Government is unlikely to extend Anthropic export controls to other AI firms, as intimated by Sacks, due to Anthropic’s non-compliance.

- Lots of questions going forward: What happens to Anthropic’s mega-IPO (S-1 only recently filed, but likely needs adjusting already); Will every frontier AI model release now be viewed as a national security concern going forward?; Significant uptake in companies and developers using multiple models, including Open Source AI, on private cloud and on-prem servers to avoid AI model lockout by any one provider; Chinese Open Source models, likely with limited or no KYC (Know Your Customer) protections, may spread further, potentially increasing cyber, bio and physical weapon threats regardless of what the US govt decrees. In the US and the West in general, permissions may become as important at AI model capabilities.

- In follow up news, Anthropic said to sending its top technical staff to Washington DC late Sunday.

- Incidentally, China has also accelerated technology IPOs as part of market reforms [China Securities Journal]. Separately, Luxshare Precision is said to plan to list in Hong Kong by as early as Jul. China AI model maker Zhipu +48% as it confirmed the launch of GLM-5.2;

-Global bond yields track decline in Oil FUTs. Traders assess whether the US/Iran ‘deal announcement’ will have implications for the plethora of central bank decisions due this week.

- Japan rates fell, benchmark 10-year -6bps on top of steep falls last week, even as the BOJ expected to hike by 25bps tomorrow, which would be the first hike since Dec, 2025.

- Central Bank week: RBA/BOJ tomorrow, followed by US Fed, UK BOE, Swiss SNB, Norway, Sweden, Norway, Brazil, Chile, Taiwan, Philippines, Indonesia, Ukraine, Czech, Russia.

- Focal points for Tuesday’s BOJ decision include, of course, if the JP central bank will hike rates as the market expects. Any forward guidance amid the temporary medical leave of BOJ Gov Ueda will also be watched. BOJ Dep Gov Uchida will host the central bank’s post-rate decision press conference on Tues, according to prior reports. Recall Uchida had moved markets all the way back in early Aug of 2024.

- Meanwhile, the RBA is widely expected to keep policy on hold tomorrow as the central bank allows prior monetary tightening to playout.

- G7 kicks off in Evian, France, today. June 15-17th. US Pres Trump to be in attendance.

- Will MSGS (Madison Square Gardens Sports Corp) continue its record-breaking price run during the season (nearly doubling in price since last October) after the New York Knicks won away in the NBA finals game 5 over the weekend against the San Antonio Spurs to win their first championship since 1973, or will it be 'sell the news' after a great run?

- US equity FUTs +1.3% to +2.0% during Asia trading.

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

- Mon Jun 15th: (Mon night, US May Industrial Production)

- Tue Jun 16th: CN May Industrial Production/Retail Sales, JP BoJ Rate Decision, AU RBA Rate Decision (Tue night UK May CPI).

- Wed Jun 17th: JP May Trade Balance, (Wed night, US May Retail Sales, US Fed Rate Decision)

- Thu Jun 18th: NZ Q1 GDP, ID Rate Decision, TW Rate Decision, (Thu night, UK BoE Rate Decision)

- Fri Jun 19th: JP May National CPI, (Note: Juneteenth - US markets closed, reduced liquidity)

Holidays in Asia this week

- Tue Jun 16th: Indonesia.

- Wed Jun 17th: Malaysia.

- Fri Jun 19th: China, Hong Kong, Taiwan, US.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens +1.0% at 8,889.

-(NZ) New Zealand Fin Min Willis: Too early to call a sustained fall in fuel prices; We want to see fuel prices start coming down - comments at a News Conference.

-(NZ) NZIER Quarterly consensus forecasts of NZ economists; Cuts NZ 2026 GDP to 0.6% (prior 0.8%); 1.6% in 2027 (prior 3.0%).

-(NZ) New Zealand Treasury: Expects Q1 2026 GDP ~1%.

-(NZ) New Zealand May Performance Services Index: 47.5 v 48.7 prior.

-(NZ) New Zealand May Total Card Spending M/M: 2.2% v -1.9% prior.

China/Hong Kong

-(CN) Shanghai Composite opens +0.6% at 4,054; (HK) Hang Seng opens +1.1% at 25,001.

-(CN) China said to be unveil action plan for energy-saving in key areas - US financial press.

-(CN) Cites in China step up property aid to lower buying costs – Chinese press.

-(CN) China May M2 Money Supply Y/Y: 8.6% v 8.6%e [weekend update].

-(CN) China May YTD New Yuan Loans (CNY): 9.11T v 9.040Te [weekend update].

-(CN) China May YTD Aggregate Financing (CNY): 17.48T v 17.150Te [weekend update].

-(CN) China aluminum producers are seeing a rapid expansion in overseas orders; drivers include higher downstream demand from the green energy sector – China Securities Times.

-(CN) China accelerates technology IPOs as part of market reforms –China Securities Journal.

-(CN) China has set up digital payments system [mBridge]; the specific date of the launch was not revealed – FT [update].

-(CN) China PBOC sets the yuan mid-point at 6.8088 v 6.8109 prior (strongest level since February 10th, 2023).

-(CN) China PBOC Open Market Operation (OMO): Sells CNY425B in 7-day Reverse Repos; Net injects CNY207B v injects CNY178B prior.

Japan

-(JP) Nikkei 225 opens +1.2% at 66,783.

-(JP) Japan PM Takaichi: Welcome US-Iran memorandum towards ending hostilities - post on X.

-(JP) Japan Foreign Minister Motegi: Welcome US-Iran peace deal as big step towards resolution of situation; Hope free, safe navigation through Strait of Hormuz will be ensured; Hope final agreement will be reached on Iran's nuclear issue as soon as possible.

-(JP) Three Japan shipbuilders are seeking to revive domestic production of LNG carriers - Nikkei.

-(JP) Nikkei +5%, breaks past 69K for first time.

-(JP) Japan Petroleum Association: Will ensure stable oil supply.

-(JP) Japan Chief Cab Sec Kihara: US-Iran deal result of persistent diplomacy; Nothing decided about sending self-defense forces to Strait of Hormuz; Will make [additional] diplomatic efforts for Middle-East stability.

-(JP) Japan Takaichi cabinet approval rating falls -2.7ppts to 65.3% - FNN.

-(JP) BAESY Agreement set with NEC to strengthen Japan's active cyber defense capabilities.

-(JP) Japan to send geologists to Greenland in order to search for rare earths – US financial press [update].

Korea

-(KR) Kospi opens +5.0% at 8,526.

-(KR) South Korea Senior FX Official sets agreement with US FX Officials to discuss FX market to cooperate on weak Korean Won - Yonhap [update].

-(KR) South Korea signs crude oil and gas cooperation deal with Saudi Arabia - Yonhap [update].

-(KR) Korea Exchange activates sidecar to halt Kospi program buying for 5 minutes, following Kospi 200 FUTs rising by +5%.

-(KR) South Korea May Foreign foreign net investment in local bonds +$5.68B v +$0.55B m/m.

Other Asia

-(PH) Philippine's President Marcos calls for congress to attend Special Session; To pass priority bills on June 17th.

-(PH) Philippines Mar Overseas cash remittances: $2.7B v $2.9B prior; Y/Y: 2.0% v 2.0%e.

-(IN) US and India are not expected to reach a trade deal imminently, both are sides are expected to discuss trade at the upcoming G7 – financial press [update].

-(IN) India's Rupee gains as much as +0.5% to 94.6837/USD following US-Iran deal.

-(ID) Indonesia's Rupiah extends gains, appreciating to 17,700/USD (strongest level since May 25th, 2026).

-(ID) Indonesia Apr External Debt: $439.8B v $433.4B prior.

-(MY) Malaysia Economy Minister: Currently reviewing project applications for 2027 under the 13th plan - addressing Ministry Officials at Monthly Gathering.

-(SG) Singapore Deputy PM Wong: MAS to remove 5% cap on physical investment of precious metals under tax incentive schemes for funds; MAS will introduce Central Bank gold-vaulting services by October; Inter-bank gold trading expected to pick up from 2027.

North America

-(US) ANTHROPIC.IPO US government, citing national security authorities, orders suspending all access to Fable 5 and Mythos 5 by any foreign national; Net effect is Anthropic must disable Fable 5 and Mythos 5 to all customers (update, late Friday); A separate report says White House export limits on Anthropic were due to govt concerns about Chinese access [weekend update].

-(US) Reportedly US Government is unlikely to extend Anthropic export controls to other AI firms - The Information [weekend update].

-(US) Energy Dept offering to loan up to 40M bbl of crude oil from the SPR [weekend update].

-(US) Reportedly FAA is close to selecting Air Space Intelligence (ASI) over Palantir and Thales for its AI-powered air traffic management tool - The Air Current [weekend update].

-(VE) Pres. Trump: US military killed leader of Tren De Aragua criminal organization [weekend update].

Europe

-(EU) Joint Statement from the Leaders of the E4: We stand ready to work with the US, Iran and the IAEA to this end; The urgent re-opening of the Strait of Hormuz with unconditional and unrestricted freedom of navigation is essential.

-(RU) Follow up: Ukraine's Kyiv currently under drone and missile attacks from Russia.

-(UK) Doctors BMA union: Resident doctors in England have called off strike action on June 15th with new offer to be put to its membership - press [weekend update].

-(UK) Follow up: UK Ministry of Defense: British forces this morning boarded a sanctioned shadow fleet oil tanker in channel.

-(UK) The UK's BBC is set to cut 2,000 jobs - FT.

-(UK) Jun Rightmove House Prices M/M: -0.6% v 1.2% prior; Y/Y: -0.5% v -0.3% prior.

-(UK) LBMA considers moving its London morning gold auction to Asia hours – US financial press.

-(PL) Poland's Armed Forces: Military aviation operations have commenced in Polish airspace due to Russian attack on Ukraine - post on X.

-(PL) Follow up: Poland's Armed Forces: Operations of military aviation in our airspace concluded - post on X.

Middle East

-(IR) Iran's Deputy Foreign Minister: [Confirms] From tonight the end of the US naval blockade against Iran will begin; Negotiations for final deal will be held in a period of 60 days; The 60-day period negotiations will focus on ending of sanctions - Tasnim.

-(PK) Pakistan PM: Following intensive talks, we are pleased to announce the peace deal between the United States of America and Islamic Republic of Iran has been reached; The official signing ceremony will be on Friday, 19th June in Switzerland.

-(IR) Pres Trump: Iran deal is scheduled to be signed on Sunday, immediately after which the Strait will be open to all; Look forward to working with Iran; At the appropriate time, we will go in and get the nuclear dust and downblend or destroy it either in Iran or in the US - Truth Social (update, midday Sat) [weekend update].

-(IR) US military shot down multiple Iranian one-way attack drones that were headed toward the Strait of Hormuz in a threat to commercial traffic - press [weekend update].

-(IR) President Trump: US to resume Iran strikes if can't reach nuclear accord; MOU suspends tolls in the Strait for 60 days; Describes Netanyahu as "very difficult" - NYT phone Interview.

-(IR) Senior Iranian Official: Under draft memorandum with US, Tehran agrees that it will neither produce nor acquire nuclear weapons - update.

-(IR) President Trump: The Deal with the Islamic Republic of Iran is now complete.

-(IR) Pres. Trump: This Great Deal will bring Peace and Security to the whole Region. Many presidents have tried to mak... - post on Truth Social.

-(IR) Strait of Hormuz oil backlog could take weeks to clear after US-Iran deal – FT [update].

-(PK) Pakistan Finance Minister Muhammad Aurangzeb: Pakistan played critical role in Iran-US mediation - comments on BTV.

-(IL) Israel May Trade Balance: -$3.3B v -$4.6B prior (update).

Levels as of 01:20 ET

Nikkei 225 +5.0%; ASX 200 +1.4%; Hang Seng +0.6%; Shanghai Composite +1.0%; Kospi +5.5%.

Equity S&P500 Futures +1.3%; Nasdaq100 +2.0%; DAX +1.7%; FTSE100 +0.8%.

EUR 1.1622-1.1571; JPY 160.23-159.74; AUD 0.7088-0.7042; NZD 0.5866-0.5826.

Gold +2.7% at $4,332/oz; BTC +2.3% at $65,706; Crude Oil -4.9% at $80.72/bbl; Copper +1.6% at $6.5548/lbs.