Middle East situation largely unchanged, risk assets no worse off in Asia

Asia Market Update: Middle East situation largely unchanged; Risk assets no worse off in Asia; Yen jawboning begins at 20-month lows; US-China trade prep continues.

General trend and developments

-Equities started under renewed pressure in Asia, following the US session, as traders stay focused on the Iran conflict / Strait of Hormuz effective closure. Trump promises "Watch what happens to these deranged scumbags today".

-Saudi Arabia reported intercepting dozens of drones today, but no fresh damage thus far reported.

-A statement attributed to Iran’s new leader Mojtaba Khamenei promised continued closure of the Strait of Hormuz was not delivered by him in person, but via written statement read aloud by an anchor on Iranian state television. Fueling speculation that the former Iran Supreme Leader’s son is either dead or incapacitated. Tensions kept high via further reports from unnamed US officials that Iran has begun laying mines in the Strait of Hormuz.

-Overall, the Asia session saw a slight bid in risk assets amid slightly softer oil prices, with Bitcoin, Ethereum, Silver, Gold and US equity FUTs off their US session lows.

-Jawboning from Japan Fin Min Katayama that she was in ‘close communication’ with her US counterparts at Treasury had no effect on the Yen, hitting July 2024 lows at nearly 159.50.

-In US-China trade news: USTR Greer said he would also travel with Treas Sec Bessent for his meeting with China Vice Premier He Lifeng in Paris (March 15-16th). Meanwhile US Sec of State Rubio reportedly will participate in Trump's trip to China, despite having been sanctioned by China back in 2020 for criticisms of Hong Kong and treatment of Uyghur Muslims in Xinjiang. Note a potential olive branch offered to China by the US with reports Trump Admin does not plan to issue duties for battery material imports from China.

-Falling retail passenger vehicle numbers in China for Jan & Feb heighten concerns of China‘s dependency on continually growing exports for its economic growth.

-India reportedly asking China for urea (world’s most common nitrogen fertilizer|) due to supply constraints out of the Middle East highlights shifting dependencies between nations as energy and raw material-dependent countries scramble to secure supply.

-US equity FUTs +0.1% to +0.2% during Asia trading.

-Daily Asia Fixed Income/Capital Markets Pulse: -Daily Asia Fixed Income/Capital Markets Pulse: Higher bond yields seen again in Asia ahead of another weekend of potential geopolitical risk. There are also, 16 central bank decisions next week. AU 3-yr yield +2bps [RBA next week (Mar 17th)]. Japan 2-year JGB yield +2bps to 1.275%, 10-year JGB yield rises by 5bps to 2.230%; Long-end 40-years flat; 30-year +2bps at 3.490%. Weaker demand seen at JP auctions [Japan sells ¥4.7T vs. ¥4.7T indicated in 3-Month Bills; Avg Yield: 0.7740% v 0.7667% prior; bid-to-cover: 2.84x v 3.55x prior;

Japan sells ¥300B vs. ¥300B indicated in 10Year Climate Transition Bonds; Yield at lowest accepted price: 2.1950% v 1.6800% prior, bid-to-cover 3.42x v 3.56x prior].

- South Korea also paid a higher yield at its 50-year bond auction. The next BOJ decision is Mar 19th [Thurs.]. UST sold 30-year bonds at lower BTC.

- Japan Fin Min: In ‘closer’ contact with US authorities on FX; Philippines sees 16% rise in power prices in Apr on higher oil prices ; US/CN talks in focus [Mar 15-16th]. US Core PCE in focus.

- China CICC to issue CNY2.0B in 2028 notes; Volatility in focus for EA buyout debt pricing [financial press]; Iran war presents challenges for CLO market [US financial press].

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

-Fri Mar 13th (Fri night, EU Jan Industrial Production, US Jan Core PCE, US Q4 GDP (2nd Est), US Mar Michigan Consumer Sentiment).

Holidays in Asia this week

-No holidays in Asia this week.

Headlines/economic data

Australia/New Zealand

- (AU) ASX 200 opens -0.5% at 8,586.

- (AU) Follow up: ACCC: Calling on industry to explain widely varying fuel prices - financial press.

- (NZ) New Zealand Feb Manufacturing PMI: 55.0 v 55.2 prior (5th month of expansion).

- (NZ) New Zealand Jan Net Migration: 4.46K v 3.60K prior.

China/Hong Kong

- (CN) Shanghai Composite opens -0.3% at 4,117; (HK) Hang Seng opens -0.5% at 25,584.

- (CN) Alibaba launches OpenClaw mobile app - financial press, citing presence in App store.

- (CN) China Jan Prelim Retail Passenger Vehicle Sales M/M: -33.1%, Y/Y: -25.4% [overnight update].

- (IN) India reportedly asks China for urea - press [overnight update].

- (CN) China said to reject company's request to tap 95M barrels of national commercial reserves; China tells refiners it cannot release petroleum reserves yet - press.

- (CN) Companies in China said to accelerate moves to hedge against "swinging Yuan", with regulatory encouragement - US financial press.

- (CN) Announces reduction of China iOS App Store commission fee from 30% to 25%; effective Mar 15th.

- (CN) US Sec of State Rubio reportedly will participate in Trump's trip to China - SCMP.

- (CN) China PBOC sets Yuan reference rate: 6.9007 v 6.8959 prior.

- (CN) China PBOC Open Market Operation (OMO): Injects CNY38B in 7-day Reverse Repos; Net drains CNY7B v injects CNY2B prior.

Japan

- (JP) Nikkei 225 opens -1.6% at 53,587.

- (JP) Follow up: Japan Fin Min Katayama: In ‘closer’ contact with US authorities on FX, communicating with the US 'more than usual' - financial press.

- (JP) Japan Trade Min Akazawa: Japan's crude oil imports to slide later this month - financial press.

- (JP) Japan said to be ready to join Trump's 'Golden Dome' project - financial press.

- (JP) Japan Fin Min Katayama: Oil prices remain high, caution is warranted - financial press.

- (JP) Japan Chief Cabinet Sec Kihara: France's Macron to visit Japan from March 31st - financial press.
- (JP) Japan Econ Min Kiuchi: Reiterates significant fluctuations in financial markets - financial press.

Korea

- (KR) Kospi opens -3.1% at 5,412.

- (KR) South Korea Industry Minister: To limit export of Naphtha produced in South Korea - financial press.

- (KR) South Korea reportedly sees KRW20.0T extra budget on chip boom - Chosun.

- (KR) US imposes sanctions against North Korea due to its weapon scheme - press.

- (KR) Pan Ocean [028670.KR]: Plans to invest KRW228B in building 2 Newcastle vessels.

- (KR) South Korea Presidential Office: Indonesia Pres Subianto Prabowo visiting South Korea on March 31st to April 2nd, 2026.

- (KR) South Korea President Lee approval rating at 66% - Gallup (record high for Gallup).

- (KR) South Korea Jan M2 Money Supply M/M: 0.7% v 0.6% prior.

Other Asia

- (PH) Philippines Jan Unemployment Rate: 5.8% v 4.4% prior.

- (PH) Philippines sees 16% rise in power prices in Apr on higher oil prices – US financial press.

- (PH) Philippines SEC to lift freeze on new online lending platforms - fiancial press.

- (PH) Phillipine Trade Minister: Geopolitical tensions no longer distant headlines, they are economic shocks - financial press.

- (MY) MalaysiaTrade Minister: Currently engaged with US on its unfair trade probe - financial press.

- (MY) Malaysia govt spending for petrol subsidies to increase to MYR2B, in order to maintain fixed price of RON95 transport fuel - financial press.

- (SG) Singapore Min of State Tan: Ready to help businesses, people on energy needs - financial press.

- (TH) Thailand Feb Consumer Confidence: 53.7 v 52.8 prior.

- (TW) US Weapons package for Taiwan could be approved After Trump's China trip (end-Mar, early Apr) - financial press, citing source.

North America

- (US) Pres. Trump: We are totally destroying the terrorist regime of Iran, militarily economically... Watch what happens to these deranged scumbags today - post on Truth Social

- (US) USTR starts 60 section 301 investigations relating to failures related to forced labor; The countries include China, EU and the UK.

- (US) Jan Housing Starts: 1.487M V 1.341Me (~1-year high); Building Permits: 1.376M V 1.410Me.

- (US) Initial Jobless Claims: 213K V 215Ke; Continuing Claims: 1.850M V 1.85Me.

- (US) Pres. Trump: The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money. BUT, of far greater interest and importance to me, as President, is stoping an evil Empire, Iran, from having Nuclear Weapons, and destroying the Middle East and, indeed, the World. I won’t ever let that happen!

- (US) Treasury $22B 30-year bond reopening draws 4.871% V 4.750% prior; Bid to Cover 2.45 V 2.66 perior and 2.42 over last 8 reopenings.

- (US) US CBP is developing a four-part system for tariff refunds, which is ~40-80% complete.

- (US) Flexport Global Logistics Update: USTR Launches 16-Nation Section 301 Probe into Structural Excess Capacity Amidst Threat of Spanish Trade Embargo; Middle East Conflict Severs Key Air and Sea Corridors amid Chinese and Taiwanese Post-Holiday Demand. [TPEB]: Watch for the March 15 GRI and new emergency fuel surcharges (EFS) as carriers react to bunker price spikes caused by Middle East volatility.

- (US) US military said to have burned through "years of munitions" in Iran conflict - FT.

- (US) Trump to sign executive orders on 2:00pm ET Friday - financial press.

- (US) Atlanta Fed GDP Now: Raises Q1 GDP estimate from 2.7% to 2.1%.

- (US) President Trump: Where is the Federal Reserve Chairman, Jerome “Too Late” Powell, today? He should be dropping Interest Rates, IMMEDIATELY, not waiting for the next meeting!

- (US) Asia reportedly set to pledge $30.0B in energy, mineral deals with US [no specific country named] - financial press.

- (US) USTR Greer seeks to start negotiations with EU and Japan for critical minerals trade agreement in April - press (update).

- (US) Jan Trade Balance: -$54.5B V -$66.0Be.

- (US) Weekly EIA Natural Gas Inventories: -38 BCF VS. -42 BCF to -46 BCF indicated range.

- (US) Issues new Russia-related general license - Treasury website.

- (US) Trump believes Mojtaba Khamenei is injured but alive - financial press.

- (US) Cuba said to release 51 prisoners, citing 'relations with Vatican' - financial press.

- (US) President Trump: The United States of America looks very much forward to hosting the FIFA World Cup. Ticket sales are “through the roof!”.

- (CA) Canada Jan Int'l Merchandise Trade (CAD): -3.65B V -1.1Be.

- (BR) Brazil End-Feb IBGE Inflation IPCA M/M: 0.7% v 0.6%e; Y/Y: 3.8% v 3.8%e.

- (CO) Colombia Finance Ministry: Carried out debt swap with market makers for CLP2.98T.

- (VE) Venezuela Government: Colombia's Petro maintains invitation to Rodriguez to meet - financial press.

- (PE) Peru Central Bank (BCRP) leaves Reference Rate unchanged at 4.25%; as expected.

Europe

- (RU) Russia said to be gaining up to $150M/day in extra oil revenues as the Strait of Hormuz disruption boosts demand for its crude from India and China.

- (EU) Commission Statement: Will carefully review 301 investigation details; Should continue U.S. trade deal implementation; Remain ready to constructively engage with U.S.

- (EU) ECB’s Villeroy (France): Sees risks and opportunities for EU in private credit.

- (FR) French Pres Macron: One military staff died, several injured, during attack in Erbil, Iraq - financial press.

- (TR) Turkey Central Bank (CBRT) leaves one-week repo rate unchanged at 37.00%; As expected.

- (IE) Ireland Feb CPI M/M: -0.9% v -0.9% prior; Y/Y: 2.7% v 2.7 % prior.

Middle East

- (IR) Iran Supreme Leader Mojtaba Khamenei: Continued closure of Strait of Hormuz is best tool to put pressure on the enemy - first public statement.

- (IR) US officials say Iran has begun laying mines in the Strait of Hormuz as of today - New York Times.

- (IR) Energy Sec Wright: Escorting a tanker through the Strait will happen relatively soon (possibly by end of the month), but can't happen now; Military operations will take weeks, not months.

- (SA) Follow up: Saudi Arabia says it has intercepted and destroyed 28 drones in its airspace - financial press.

- (SA) Saudi Arabia says it intercepted 12 drones in its airspace - financial press.

- (SA) Follow up: Saudi Arabia intercepted 3 drones in Eastern, Central regions.

- (IL) IDF Identified missiles launched from Iran toward Israel - Telegram post.

- (IQ) Two surveillance drones fell at Iraq Southern Majnoon oilfield with no damage nor casualties – financial press.

- (PK) Security source confirms airstrike on Afghanistan - financial press.

- (AE) Dubai: Debris caused 'minor incident' in Central Dubai - financial press.

Levels as of 00:20 ET

Nikkei 225 -1.3%; ASX 200 -0.1%; Hang Seng -0.5%; Shanghai Composite -0.2%; Kospi -1.8%;.

Equity S&P500 Futures +0.2%; Nasdaq100 +0.1%; DAX -0.2%; FTSE100 -0.5%.

EUR 1.1530-1.1500; JPY 159.68-159.01; AUD 0.7093-0.7059; NZD 0.5862-0.5829.

Gold +0.6% at $5,109/oz; BTC +2.8% at $71,385, Crude Oil -0.2% at $95.51/bbl; Copper -0.2% at $5.8110/lb.