New Zealand inflation forecasts fall as Japan PPI pain lingers

Asia market update: Iran remains quiet, focus stays on earnings; NZ inflation forecasts fall as JP PPI pain lingers; US July PPI tonight, (US July Retail Sales tomorrow).

General trend and developments

- Pres Trump seems willing at this point to let the Iran situation continue as-is, and with no further news out of any potential Iran-Oman agreement and a Pakistani official continuing to insist that the US-Iran MOU deadline can be extended there is little to affect markets, reflected by WTI crude front FUTs trading in a narrow $81-83/bbl band over the past 24 hours.

- Notably, Japan’s PM held a bilateral phone call with Iranian leaders to discuss the Hormuz Strait.

- Significant fall in New Zealand Q3 Inflation Expectations out of the RBNZ, with surveys seeing 2 years out at just 2.34% vs 2.53% prior quarter and an even more pronounced fall 1-year out to just 2.6% vs 3.4% prior. This would take rates well toward the mid-point of the RBNZ 1-3% range. Kiwi dollar -0.6% and 2-year yields pressed further down following the data, -6bps.

- Despite a bout of sharp strength in the Yen during the overnight US session, it quickly dissipated with the Yen once more pressing back towards the 160 level. The weak Yen not portending well for Japan’s import costs.

- Japan’s PPI for July may have benefitted from the month’s lower oil prices at the time, but underlying data shows structural cost pressures remaining at three-year highs, with Yen-based import prices surging +29.1% y/y - the weak Yen continuing to press on raw material costs.

- Overnight OIS pricing now sees the chances of a BOJ 25bps rate hike by October now fully priced in, and September jumping up to 78% vs 63.5% day before.

- US July CPI came in right in line overnight, thus not giving the market any new bones to work with on the inflation front, although Fed rate hike chances in September now up to 40%. US July PPI figures to follow tonight.

- In Australian earnings, telco Telstra fell -4.3% despite raised profits, dividend and a A$1B buyback, not yet enough to win back investor concerns on subscriber pressures and recent network outages. ANZ bank +4.4% on solid Q3 cash profits, beating market expectations.

- Tech earnings to continue out of HK/CN from names such as China Mobile, Lenovo, chip-makers SMIC and Hua Hong, CK Hutchison and China retailer JD.com to report during the US session.

-Tencent -3.8% as AI Capex jumped another 66% in Q2, when it was high AI capex that saw the stock price already off by -21% YTD heading into its earnings. Management insists it is confident in monetizing its AI investments, even as the fair value of its holdings in listed investee companies fell to CNY487B from CNY547B in the prior quarter.

- FoxConn (Hon Hai) started the day +2.5% on the company’s expectations for a further rise AI server share but reversed course to be down -2.8% at time of writing. Notably, revenues from Apple now down to 29% when it used by be 50%+ and will start shipping Vera Rubin platforms for Nvidia in Q4 (inline).

- In trade-related news Ford will shift production of the one model it currently ships from China to the US, with the Lincoln SUV to see expanded US output. Comes as Mexico pushes for lower auto tariffs in its US trade talks.

- Meanwhile US-China 'Board of Investment' talks have reportedly stalled ahead of the expected Trump-Xi meeting in the US later in September.

- China PBOC for the third day in a row injected zero volume of 7-day reverse repo ops. Comes as the PBoC’s Q2 Monetary Policy Implementation Report said it continues to implement 'moderately loose' monetary policy.

- China AI model-maker DeepSeek officially upgraded its V4 Pro model. Co has also indicated “significant” price hikes for tokens in the near future.

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

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

- Thu Aug 13th: CN July New Yuan Loans & Agg Finance & Money Supply, EU Jun Industrial Production, (Thu night, US July PPI).

- Fri Aug 14th: NZ July Business PMI, MY Q2 GDP, TW Q2 GDP, HK Q2 GDP, EU Prelim Q2 GDP & Jun Trade Balance, (Fri night, US July Retail Sales & Core Retail Sales, US Prelim Q3 Atlanta Fed GDPNow).

- Sat Aug 15th: KR July Trade Balance.

Holidays in Asia this week

- Mon Aug 10th: Singapore.

- Tue Aug 11th: Japan.

- Wed Aug 12th: Thailand.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens -0.2% at 9,193.

-(AU) RBA Assist Gov Kent: The Monetary Policy Board sets the level of the cash rate that it judges will achieve low and stable inflation and full employment.

-(NZ) New Zealand Q3 Inflation Expectation Survey 2-year Outlook: 2.3% v 2.5% prior.

-(NZ) New Zealand sells total NZ$450M vs. NZ$450M indicated in 2032 and 2036 bonds.

-(NZ) New Zealand BNZ July Job Ads M/M: -2.9%.

China/Hong Kong

-(CN) Shanghai Composite opens +0.3% at 3,957; (HK) Hang Seng opens -0.6% at 25,288.

-(CN) China PBoC Q2 Monetary Policy Implementation Report: Continues to implement 'moderately loose' monetary policy; To boost counter-cyclical adjustment [EU market close].

-(CN) US-China 'Board of Investment' stalls before expected Trump-Xi meeting - SCMP.

-(CN) China PBOC seen to improve policy rate transmission - Financial News [PBOC-backed newspaper].

-(CN) China revives Shanghai Free Trade Zone bond market after earlier NDRC crackdown due to prior loophole.

-(CN) Commercial banks in China have increased issuance of tier-2 bonds – Chinese press.

-(CN) Hedge funds reduce China equity exposure to 5-year low [timing uncertain] – US financial press.

-(CN) DEEPSEEK.IPO Has upgraded its V4 Pro model; the upgrade was released on late Wed; the co. priced the V4 Pro at CNY3 ($0.42) per million input tokens - Chinese press [update].

-(CN) China PBOC sets the yuan mid-point at 6.7888 v 6.7882 prior.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY0B in 7-day Reverse Repos; Net drains CNY1B v drains CNY5B prior (third straight nil injection, fourth time since 2020).

Japan

-(JP) Nikkei 225 opens +0.8% at 68,057.

-(JP) Japan July PPI (domestic CGPI) M/M: 0.1% v 0.6%e; Y/Y: 7.2% v 7.4%e [update].

-(JP) Japan July Preliminary Machine Tool Orders Y/Y: 50.4% v 52.7% prior [EU market close].

-(JP) Japan margin trading doubles in 6 months; during Jul margin trading in Japan totaled about ¥123T ($772B) [double the figure from 6 months earlier] - Nikkei [update].

-(JP) Japan PM Takaichi's Government is said to support faster BoJ rate hike [September or October]; BOJ said to be likely to raise rates in either Sept or Oct [inline with OIS] - US financial press.

-(JP) Japan Foreign Min Motegi: Protest Putin's visit to Etorofu island - Statement.

-(JP) BOJ Outright Bond Purchase Operation for 3~5 Years; 5~10 Years; >25 years; (Inline with planned amounts for Q2, 2026).

-(JP) Bank of Japan (BOJ) Results related to today's outright bond buying operations.

Korea

-(KR) Kospi opens +3.0% at 6,773.

-(KR) According to Capital Economics analyst, South Korea chip-driven ‘boom’ could lose steam in 2028 – US financial press.

-(KR) Follow up: South Korea confirms to have made first gold-related investment in 13 years during Q2.

-(KR) 005930.KR Singapore wealth fund Temasek said to invest in Samsung Electronics and Hynix; cites sources and specific terms were not disclosed - Asia Business Daily [update] [EU market close].

-(KR) South Korea steps up home supply push, discloses package to increase the housing supply (as expected); cites the Financial Services Commission (FSC) – US financial press [update].

Other Asia

-(TW) Taiwan's Air Force expected to form drone strike team in early-2027 - Liberty Times [citing a senior military official].

North America

-(US) JULY CPI M/M: 0.1% V 0.1%E; Y/Y: 3.4% V 3.4%E [US market close].

-(US) JULY FEDERAL BUDGET BALANCE: -$432.3B V -$346.0BE (biggest monthly deficit since Mar 2021) [US market close].

-(US) TREASURY $42B 10-YEAR NOTE AUCTION DRAWS 4.683% V 4.468% PRIOR; BID-TO-COVER: 2.53X V 2.40X PRIOR(*Note: draws highest yield since 2007) [US market close].

-(US) DOE CRUDE: +17.4M V -1.5ME; GASOLINE: -1.0M V -1.0ME; DISTILLATE: +0.0M V -1.5ME [US market close].

-(US) US State Dept: Announces new program to speed logistics between allies for key AI goods per the Pax Silica initiative [US market close].

-(US) US July CPI Supercore Y/Y (Core Services less Shelter) 2.84% v 3.17% prior; Services less energy services M/M: +0.2% v -0.2% prior [US market close].

-(US) Atlanta July Sticky-CPI (1-month annualized) 3.5% v 0.8% m/m; Core Sticky CPI (1-month annualized) 3.9% v 0.7% m/m [US market close].

-(US) MSCI: Announced the results of the August 2026 Index Review for the MSCI Equity Indexes, effective as of the close on Aug 31st - update.

-(US) US Undersecretary of Defense Colby: Don't see radical changes in nuclear strategy - Speaks to Reporters.

-(US) President Trump: For many years, the vast Majority of Americans have asked to make Daylight Saving Time permanent, but no Administration has been able to get it properly done, until now. I am proud to announce that the House of Representatives has passed the Bill, and it has now gone to the Senate for final approval. - post on Truth Social.

-(US) GOOGL DeepMind's Demis Hassabis pitched new industry organization for AI-safety coordination - WSJ.

-(US) ANTHROPIC.IPO To acquire startup "Decart" AI lab for $6B - US financial press.

-(US) Former Google AI Leader Jeff Dean in discussions for $1B funding for DiscoveryLoop - Insider.

-(CA) Canada and the US are not yet ready to make a tariff agreement as Canada is unsatisfied with the latest US deal proposal - CBC [US market close].

-(MX) Mexico pushing for lower auto tariffs in US trade talks [counterproposal] - WSJ.

-(VE) Venezuela Central Bank publishes CPI data in statement: Venezuela earthquake push July inflation to 19.9% m/m.

-(CO) President Espriella: More than 11,000 homes destroyed by Colombia earthquake - Speaks in Bogota, Colombia.

-(BR) Brazil Senate approves the base text of fuel bill – Local press [update].

Europe

-(RU) Russia President Putin: Ready for cooperation with everyone; seizure of Russian trade vessels by EU was piracy. Ready to look for solution to Kuril Islands with Japan [EU market close].

-(DE) Germany July Final CPI M/M: 0.8% v 0.8% prelim; Y/Y: 2.8% v 2.8% prelim [EU market close].

-(DE) Germany July Final CPI EU Harmonized M/M: 0.9% v 0.9% prelim; Y/Y: 2.8% v 2.8% prelim [EU market close].

-(RU) Russia's Pres Putin visits Iturup island in Kuril - Tass.

-(RU) Russia President Putin: Strong Rouble benefits ordinary people, raises issues for export companies - Izvestia [Russian Media].

-(IT) Italy July Final CPI M/M: 0.3% v 0.2% prelim; Y/Y: 2.9% v 2.8% prelim [EU market close].

-(IT) Italy July Final CPI EU Harmonized M/M: -1.0% v -1.0% prelim; Y/Y: 2.9% v 2.9% prelim; CPI Index (ex-tobacco): 103.1 v 102.8 prior [EU market close.

-(UK) July RICS House Price Balance: -30% v -30%e.

-(SE) Sweden July PES Unemployment Rate: 3.8% v 3.6% prior.

Middle East

-(IR) Pres. Trump: Claims the US has "total control over the Strait of Hormuz...think we will keep it!" - Truth Social [US market close].

-(IR) Pakistan Official: US-Iran MOU deadline can be extended; Larger peace process has stalled but hope to resume soon [US market close].

Levels as of 01:20 ET

Nikkei 225 +1.6%; ASX 200 -0.3%; Hang Seng +0.2%; Shanghai Composite +0.4%; Kospi +3.7%.

Equity S&P500 Futures +0.1%; Nasdaq100 +0.2%; DAX +0.3%; FTSE100 +0.3%.

EUR 1.1532-1.1520; JPY 159.49-159.18; AUD 0.7067-0.7045; NZD 0.5870-0.5827.

Gold -0.1% at $4,403/oz; BTC +0.1% at $63,952; WTI Crude Oil -0.3% at $83.00/bbl; Copper -0.6% at $6.5663/lbs.