US-Iran MOU deadline largely irrelevant – Markets look to coming US macro events

Asia market update: JGB yields/BOJ/ inflation hurt JP GDP; US-Iran MOU deadline largely irrelevant; Markets look to coming US macro events; US cuts KR drills; CN data dump ahead; Vol light with KR Hol.

General trend and developments

-Light trading to start the week with a Korean holiday today and the Nikkei mostly flat. Hang Seng outperformed +1.5%.

-Weaker than expected Q2 GDP growth out of Japan mixed with a hint of stagflation is not what the BOJ nor the Japan govt would have ordered. Inflation hurt the GDP figures with flat Private Consumption due to higher prices and a significant drop in Business Spending when a rise was expected. Meanwhile, press reports at the tail end of last week continued to talk up the likelihood of the BOJ hiking in September and then at an accelerated rate thereafter. This hawkish expectation may be partly responsible for a continuation of JGB yield rises across the curve in Japan from late last week, with benchmark 10-years +5bps to 2.93% today, the highest in 30 years.

- Key developments in the Iran conflict for the week ahead include Pres Trump’s threat of an indefinite US naval blockade of the Strait of Hormuz, alongside Treas Sec Bessent’s “never before seen” economic sanctions targeting Iran's shadow oil fleet, banking networks, and cryptocurrency exchanges. [**TTN Note: Watch to see if "banking networks" includes targeting the City of London, where large stashes if Iranian regime wealth are believed to have been hoarded over the past several decades].

-Iran Calendar Note: Today, Aug 17th, marks the official 60-day clock expiry of the US-Iran MOU, unless extended. Late on Friday Iraq Foreign Min said no decision made yet on even resuming talks with the US.

-Additional macro focus will on the FOMC meeting Minutes (Wed, Aug 19th), followed by the US and global August flash PMIs (Fri, Aug 21st). However, investors likely already looking past this week to next week, with a powerful trio of US catalysts; Wed Aug 26th sees US July PCE price index report as well as Nvidia's highly anticipated earnings. then Fri Aug 28th will see Fed Chair Kevin Warsh’s first Jackson Hole speech in Wyoming.

-By ordering a “substantial reduction” in the Ulchi Freedom Shield exercises with South Korea just hours before their scheduled launch, Pres Trump abruptly curtailed defensive drills designed to counter North Korean threats. Although Trump signaled in his Truth Social post that this was due to his “very good relationship with Kim Jong Un of North Korea”, the last-minute downsizing likely signals Washington's growing frustration with Seoul's refusal to join US efforts to denuclearize Iran as well as the “unfair” financial burden typically borne by the US for the joint military exercises.

-Note that China’s monthly data dump for July has been delayed until after the Chinese market close, likely 03:00am ET / 07:00 GMT.

-Google and Australia’s debt agency bond syndicate vie for Aussie investor dollars; No amount nor date yet for Google’s inaugural Kangaroo AUD bonds (3, 5, 10 & 20-years) but the potential exists to compete with the AOFM’s syndication of its new May 2038 Treasury bond, likely tomorrow (Tues).

-China PBOC today saw its fifth consecutive pause in 7-day reverse repo OMO injections, all the while aggressively injecting funds via its new monetary tool, overnight reverse repos. Analysts thus far view the ops as aiming to smooth out ultra short-term liquidity spikes without signaling broad monetary easing. (i.e. a tactical, rather than a fundamental policy pivot).

-In AI news, following last week’s mega $500B third-party funding plan announcement with several of Wall Street’s biggest names, late on Friday Nvidia reportedly to reduce its intention to guarantee OpenAI's Stargate project from $250B to less than ~$120B. Nvidia appears to be orchestrating a deliberate offload of massive balance-sheet risk onto third-party capital markets while preserving long-term demand for its chips. [TTN Reminder: Recall when reports first leaked that Nvidia might directly guarantee the massive $250B debt facility for OpenAI's Ohio data center campus, Nvidia’s stock dropped as much as 5%]. As for OpenAI, presumably Nvidia's reduction of its direct guarantee for the Ohio data center's first phase to under $120B will mean the remaining funding gap for OpenAI's 10GW project will be expected to be absorbed by the newly established Wall Street private funding pools.

-Meanwhile in China AI news Alibaba unveiled its Qwen3.8-27B multimodal dense model and released weights of its Qwen3.8 flagship model.

- After reports of Apple’s renewed interest in the Chinese market via AI, including partnering with Alibaba to offer an Apple AI model in China, Commerce Secretary Lutnick urged Apple to avoid purchasing memory chips from Chinese manufacturers CXMT and YMTC, following recent reports that Apple is testing CXMT components for certain devices sold in China.

-Australia half-year earnings season now in full swing. National Australia Bank fell nearly -5% on a significant slump in home loan applications and a bearish macro-outlook, despite reporting higher cash earnings and resilient business lending.

-New Zealand Total Card Spending bounced back to positive territory in July, while July’s Performance Services remained steady within the 50 handle.

-Standout names for HK/CN earnings this week include: Geely, Xiaomi, Baidu, Hong Kong Exchanges, Alibaba, China Telecom, Ping An and Sinopec, among others.

-US retailers report this week at the tail-end of US earnings season (and following on from the weakest headline US Retail Sales in over a year last Friday): Home Depot, Walmart, BJ’s Wholesale, Lowe’s, Estee Lauder, TJX, Ross. There will be even closer examination of these companies’ results given the declining Michigan consumer confidence index only staying slightly north of 50, also last Friday.
-US equity FUTs +0.1% to +0.3% during Asia trading.

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

-Mon Aug 17th: CN July FDI.

-Tue Aug 18th: AU Aug Westpac Consumer Sentiment, (Tue night, US July Housing Starts & Pending Home Sales, US July Industrial Production).

-Wed Aug 19th: NZ Q2 PPI Input & Output, JP Jun Core Machinery Orders, AU Q2 Wage Price Index, ID Rate Decision, EU July CPI & Core CPI, (Wed night, IN RBI MPC Meeting Minutes, US FOMC Meeting Minutes).

-Thu Aug 20th: JP July Trade Balance, CN PBoC Loan Prime Rates, AU July Jobs, MY July Trade Balance, (Thu night, ECB Account of Monetary Policy Meeting).

-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

-Mon Aug 17th: Indonesia, South Korea.

-Fri Aug 21st: Philippines.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens -0.4% at 9,084.

-(AU) Australian Office of Financial Management [AOFM]: Launches new May 2038 Treasury Bond.

-(NZ) Thailand PM Anutin to visit New Zealand this week with Thai business delegation - NZ PM Luxon in press comments.

-(NZ) New Zealand Stats Agency: Petrol and diesel prices continue to fall in July - update.

-(NZ) New Zealand July Performance Services Index: 50.6 v 50.9 prior.

-(NZ) New Zealand July Total Card Spending M/M: +1.0% v -1.2% prior.

-(NZ) New Zealand July Food Prices M/M: 0.1% v 0.6% prior.

China/Hong Kong

-(CN) Shanghai Composite opens +0.1% at 3,930; (HK) Hang Seng opens +0.7% at 25,303.

-(CN) China energy strategy ‘vindicated’ by the Iran war - FT [update].

-(CN) According to a tier 1 US broker, China humanoids are near mass-production inflection point – US financial press.

-(CN) China content providers offer value training AI; notes the AI-share AI data sector has gained momentum recently – Shanghai Securities News.

-(CN) 9988.HK Unveils Qwen3.8-27B multimodal dense model in Qwen3.8 series and releases weights of its Qwen3.8 flagship model.

-(CN) China PBOC sets the yuan mid-point at 6.7873 v 6.7878 prior (strongest level since February 8th, 2023).

-(CN) China PBOC Open Market Operation (OMO): Sells CNY566B in 1-day Overnight Reverse Repos.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY0B in 7-day Reverse Repos; Net injects CNY199B v injects CNY348B prior (fifth straight nil injection, sixth time since 2020).

Japan

-(JP) Nikkei 225 opens +0.2% at 68,849.

-(JP) Japan Q2 preliminary GDP Q/Q: 0.3% V 0.5%E; GDP annualized Q/Q: 1.1% V 2.0%E.

-(JP) Japan PM Takaichi 'skips' Yasukuni Shrine on WWII surrender anniversary (weekend update).

-(JP) Japan Jun Final Industrial Production M/M: 1.9% v 1.3% prelim; Y/Y: 4.9% v 4.2% prelim.

-(JP) Japan Jun Tertiary Industry Index M/M: -0.2% v -1.0%e.

-(JP) Japan considers deeper defense ties with Australia, India to ease supply chain issues - China Press.

-(JP) Japan LDP government, ruling bloc consider convening Diet session later in September - TV Asahi.

-(JP) Japan Ex-Currency Chief: BoJ should raise rates at every meeting - US financial press.

-(JP) Japan Econ Min Kiuchi: Japan's economy continues to recover moderately; Necessary to closely monitor the impact of the situation in Middle East; Economy is likely to be supported by an improving employment, wage environment and government policy steps.

-(JP) Japan PM Takaichi has hands examined at Tokyo clinic - FNN.

Korea

-(KR) Kospi closed for the 'National Liberation Day' substitute holiday.

-(KR) South Korea Defense Ministry: Joint drills with US will go ahead.

-(KR) South Korea Pres Lee: Calls for a sitdown with North Korea to pursue peaceful coexistence; South transform the Korean peninsula's unstable armistice into a peace regime [weekend update].

Other Asia

-(IN) India PM Modi: Resolved to make India a 'developed' nation by 2047; India will have up to 8 more chip plants in the next 7 or 8 years - Independence Day address [weekend update].

-(IN) Reserve Bank of India (RBI) has closed the FCNR deposit window early after attracting >$50.0B of inflows under the scheme - Press.

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

-(ID) Magnitude 7.7 earthquake strikes off the coast of Indonesia; dozens reported dead; A second 6.9 magnitude quake hit Sumatra [weekend update].

-(ID) Indonesia said to plan 2027 net bond issuance at IDR779.9T - financial press.

-(PH) Philippine Central Bank Governor: We expect inflation to ease gradually over medium term.

-(PH) Philippines Jun Overseas cash remittances: $3.0B v $2.7B prior; Y/Y: 1.7% v 2.0% prior.

-(MY) Malaysia July CPI Y/Y: 1.8% v 1.9%e.

-(TH) Thailand Q2 GDP Q/Q: -0.2% v -0.4%e; Y/Y: 1.9% v 1.8%e.

-(TW) Taiwan considers >5% increase in the minimum wage for 2027 – Local press.

-(SG) Singapore July Non-oil Domestic Exports Y/Y: 24.2% v 26.5%e.

North America

-(DRC) Democratic Republic of Congo: Number of confirmed Ebola cases rises to 4,945 (v 3,200 prior), including 2,325 (v 1,405 prior) deaths [Ebola outbreak becomes deadliest in the country's history, data shows].

-(US) Pres. Trump: The Senate must vote on the NO MORE CHANGING THE CLOCKS ACT as soon as possible - Truth Social [weekend update].

-(US) US said to have removed its last aircraft carrier in Asia amid focus on Iran [USS Abraham Lincoln] – Press [update].

-(US) Pres. Trump: Very happy to see that Saudi Arabia, Turkey, and Pakistan have recently, and finally, signed the Mec.

-(US) Pres. Trump: Based on my very good relationship with Kim Jong Un, of North Korea, I am not happy with the fact that the United States has, long ago, agreed to participate in Joint Military Exercises with South Korea. - post on Truth Social.

-(US) US Commander: Mental health a priority aboard USS Lincoln - Press.

-(US) Depleted SPR nears level that raises concerns about cavern damage – CNBC [update].

Europe

-(RU) Russia Foreign Ministry: Requests explanation from US and Turkey regarding alleged plans for arms supplies to Ukraine; Such action would undermine Moscow's relations with Washington and Ankara [weekend update].

-(RU) NESN.CH Russia President Putin to put Nestle units under management - Kommersant.

-(UK) Aug Rightmove House Prices M/M: -2.0% v -1.0% prior; Y/Y: -1.0% v -0.4% prior.

Middle East

-(IR) Shipping via the Strait of Hormuz slowed over the weekend, 5 commodity vessels transited the strait on Saturday; cites traffic data – financial press.

-(IR) Iran secret plan to escalate the war - WSJ [update].

-(IL) Israel Q2 Advance GDP (1st of 3 readings) Y/Y: 15.4% v 8.3%e (update) [weekend update].

Levels as of 01:20 ET

Nikkei 225 +0.3%; ASX 200 -0.5%; Hang Seng +1.7%; Shanghai Composite +1.0%; Kospi closed for the holiday.

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

EUR 1.1588-1.1564; JPY 159.40-158.96; AUD 0.7106-0.7084; NZD 0.5913-0.5886.

Gold +0.4% at $4,394/oz; BTC +0.8% at $63,582; WTI Crude Oil -0.2% at $81.28/bbl; Copper +1.7% at $6.7248/lbs.