Renewed conflict between the US and Iran sent oil prices soaring, exacerbating an ongoing global bond sell-off.
WTI crude jumped 2.22% to $87.66, with Brent crude surpassing $90 per barrel, as both sides resumed attacks.
This pushed Japan's 10-year government bond yield to 3% for the first time in 30 years, while US 10-year yields hit their highest since January last year.
The escalating tensions and rising energy costs have reignited inflation concerns across global markets.
Global bond markets saw significant movements today, with Japan's 10-year yield hitting a 30-year high, reflecting renewed inflation concerns fueled by Middle East instability.
Global Markets
Detail
S&P 500
Closed at 7,686.14 on August 31.
S&P 500 -0.33%
Nasdaq
Closed at 26,370.89 on August 31.
Nasdaq -0.12%
STOXX 600
Traded at 646.99 as of 19:44 KST on Sept 1.
STOXX 600 -0.63%
Nikkei 225
Closed at 66,215.12 on Sept 1.
Nikkei 225 -0.15%
CSI 300
Closed at 4,611.44 on Sept 1.
CSI 300 -0.30%
KOSPI
Closed at 6,835.80 on Sept 1.
KOSPI +0.23%
Hang Seng
Closed at 25,329.73 on Sept 1.
Hang Seng -0.93%
Dollar Index (DXY)
Closed at 99.61 on Sept 1.
DXY +0.20%
USD/JPY
Closed at 160.07 on Sept 1.
USD/JPY +0.21%
EUR/USD
Closed at 1.16 on Sept 1.
EUR/USD -0.23%
USD/KRW
Closed at 1,373.38 on Sept 1.
USD/KRW +0.49%
USD/CNY
Closed at 6.72 on Sept 1.
USD/CNY +0.04%
US 10-year Treasury
Closed at 4.754% on August 31.
US 10yr +2.4bp
US 2-year Treasury
Closed at 4.346% on August 31.
US 2yr -1.4bp
Japan 10-year JGB
Closed at 2.985% on Sept 1.
Japan 10yr +4.4bp
Germany 10-year Bund
Traded at 3.346% as of 19:44 KST on Sept 1.
Germany 10yr +2.4bp
Korea 10-year KTB
Closed at 4.371% on Sept 1.
Korea 10yr +5.8bp
US High Yield Spread
Closed at 260bp on August 28.
US HY Spread -3bp
WTI Crude
Closed at 87.66 on Sept 1.
WTI +2.22%
Gold
Closed at 4,382.74 on Sept 1.
Gold -1.47%
Copper
Closed at 6.61 on Sept 1.
Copper -1.17%
VIX
Closed at 14.93 on August 31.
VIX +3.54%
Global Bond Sell-off Deepens, Japan 10-year Yield Exceeds 3%
Global bond yields surged, with Japan's 10-year reaching 3% for the first time since 1996.
Yields Surge
Global Debt Reaches Record High, US Federal Debt Exceeds $40 Trillion
Global debt hit a record high of approximately $353 trillion earlier this year.
Debt Record
US-Iran Conflict Reignites, Oil Prices Soar to $91
The six-month conflict between Iran and the US escalated with mutual attacks.
Oil +$91
Global Equities Weaken Amid Bond Sell-off and Middle East Conflict
US S&P 500 futures fell 0.6%, Australia's ASX200 dropped 0.4%, and Southeast Asian ASEAN indices declined 0.5%.
Equities Weak
Global Manufacturing Rebounds in August, Driven by AI Demand
Asian factories continued to boom due to strong demand for AI chips and hardware.
Manufacturing Up
United States
US-Iran Direct Attacks Resume, Oil Surges, Global Bonds Sell OffConflict Resumes
Renewed direct conflict between the US and Iran led to a surge in crude oil prices and a global bond sell-off.
Iran's President Pezeshkian stated at the SCO summit that Tehran would reciprocate if the US honored the June agreement.
After the US attacked Larak Island, Iran retaliated with missile strikes on two US bases in Jordan, pushing Brent crude to $91.94 (+1.6%).
Inflation Fears Drive Bond Sell-off, Fed Rate Hike Odds Rise to 67%Fed Hike Odds Up
Global inflation concerns spread to bond markets, with US 10-year Treasury yields hitting a 19-month high of 4.778% and 30-year yields touching 5.27%.
The market increased the probability of a Fed rate hike in September to 67% from 60% the previous day, following hawkish remarks from Warsh at Jackson Hole.
The dollar strengthened broadly, pressuring the Australian dollar and increasing risk aversion.
North American Blue Energy Partners (NABEP) secured strategic control over Venezuelan oil fields, including those previously operated by Chinese and Russian firms.
Announced by President Trump, NABEP plans a $100 billion investment to rapidly expand Venezuelan oil production.
This move is expected to reshape regional energy supply chains and strengthen US strategic influence.
Treasury Secretary Bessent Rules Out Economic Talks with Russia Until Ukraine War EndsNo Russia Talks
During a face-to-face meeting with Russian Finance Minister Siluanov, Secretary Bessent made it clear that no economic relief or other discussions would occur until the war in Ukraine concludes.
US Stock Index Futures Weaken at September Open, Historical Weakness FearedFutures Down
Dow and S&P futures fell 0.48%, while Nasdaq futures dropped 0.83%, as September trading began.
Investor sentiment deteriorated due to soaring bond yields and rising oil prices, fueling concerns about a historically weak month.
Markets are awaiting the release of the Job Openings and Labor Turnover Survey (JOLTS) report.
Dollar Strengthens Broadly, Yen Breaks 160 Mark AgainUSD/JPY 160
The USD/JPY pair traded in the 159.64-159.98 range, with potential to break above 160.63.
This was driven by increased expectations for a Fed rate hike and pressure from Treasury Secretary Bessent on the Bank of Japan to raise rates.
The yen's movement also showed a strong positive correlation with EUR/JPY.
Pound (GBP/USD) Weakens as Fed September Hike Odds Rise to 66%GBP Weakens
The pound traded flat near a two-week low, despite some support from rising UK retail prices (largest increase since 2024).
Expectations for a Fed rate hike continued to drive dollar strength against international currencies.
Money Market Fund Assets Hit Record $13.5 Trillion, High-Yield Short-Term Debt PreferredMMF Record
Money market fund assets surpassed an all-time high of $13.5 trillion in Q1.
This marks an unusual four-year trend of continuous inflows during a rate-hiking cycle, indicating investors' strong preference for high-yield short-term assets.
Europe
Eurozone August Inflation Rises to 3.3%, ECB September Hike Almost CertainEZ Inflation 3.3%
Eurozone annual inflation climbed to 3.3% in August (from 2.9% in July), primarily driven by surging energy prices due to the Iran conflict.
An ECB study found that the energy-led price surge justified its first rate hike in June.
ECB Governing Council member Kocher stated that if inflation forecasts confirm the current situation, an immediate additional rate hike would be necessary.
Eurozone Manufacturing Sees Highest Growth in Four Years, Germany Strongest in 4.5 YearsEZ Mfg Growth
The Eurozone Manufacturing PMI rose to 52.7 in August (from 51.9 in July), its highest since May 2022, with new orders also at a multi-year high.
Germany's Manufacturing PMI reached 54.3 (from 52.2 in July), indicating its strongest production growth since January 2021, with new orders rising for the third consecutive month.
Increased demand for defense, data center construction, and inventory replenishment fueled this growth.
European Stocks Weaken as Bond Yields Surge, ECB September Hike Fully Priced InEU Stocks Weak
The pan-European STOXX 600 fell 0.2% to a one-week low, while the UK FTSE 100 and German DAX both dropped 0.5%.
UK 10-year government bond yields hit 5.23%, their highest since 2008, and German 30-year yields reached a 15-year high.
Market participants have fully priced in a 25 basis point rate hike by the ECB at its September policy meeting.
Italy's August Inflation Rises 3.2%, Below Market ExpectationsItaly Inflation
Italy's harmonized consumer price index (HICP) rose 3.2% year-on-year (from 2.9% in July) and 0.1% month-on-month.
This monthly increase was below the market expectation of 0.3%, despite strong energy prices.
UK July Mortgage Approvals Hit Lowest Since January 2024, Unsecured Lending RisesUK Mortgages Low
Mortgage approvals fell to 56,053 in July, the lowest since January 2024, missing market expectations of 59,500.
Net unsecured consumer lending increased by £2.06 billion, exceeding the £1.8 billion forecast and marking the largest rise since November 2025.
UK Manufacturing Activity Weakens, Employment Grows at Two-Year HighUK Mfg Weakens
The UK Manufacturing PMI fell to 51.7 in July (from 51.9), its weakest in five months and lowest since March.
Despite weakening activity, employment grew at its fastest pace in two years amid rising new orders.
Italy's July Unemployment Rate Stable at 5.8%, Youth Unemployment RisesItaly Jobless
Italy's unemployment rate remained stable at 5.8% in July, unchanged from the revised June figure and matching market expectations.
However, youth unemployment (ages 15-24) increased to 18.9% from 18.7% in June.
EUR/USD FX Options Shift to Bearish Bias, Reflecting Hawkish US SignalsEUR/USD Bearish
The 1-month risk reversal indicator for EUR/USD shifted from neutral to a bearish bias, indicating higher demand for put options over call options.
This shift was influenced by hawkish remarks from former Fed Chair Warsh after Jackson Hole.
European StocksGloomy Start
European stocks began September on a downbeat note as bond yields across the region continued to climb.
This rise in yields contributed to a cautious market sentiment.
Eurozone Manufacturing PMI4-Year High
Eurozone factory growth reached a more than four-year high in August, according to the latest PMI data.
This indicates a robust expansion in the manufacturing sector.
German Manufacturing PMIAccelerated Growth
German manufacturing growth accelerated in August, with a surge in new orders driving the expansion.
The PMI showed strong performance in the industrial powerhouse.
UK 10-Year Gilt YieldsHighest Since 2008
UK 10-year gilt yields climbed to their highest level since 2008, reflecting renewed inflation fears.
Concerns over the Middle East conflict reignited market worries about rising prices.
ECB's Kocher on RatesRate Hike Needed
ECB Governing Council member Robert Kocher stated that if the current inflation picture is confirmed in the ECB's next forecast, a further, imminent rate increase would be necessary.
He highlighted increased upside inflation risks in the Euro area recently.
Italy CPI+3.2% YoY
Italy's EU-harmonized CPI accelerated to 3.2% year-on-year in August.
Despite the acceleration, the figure came in below market forecasts.
UK Mortgage ApprovalsLowest Since Jan 2024
UK mortgage approvals fell to their lowest level since January 2024, according to data from the Bank of England.
This signals a slowdown in the housing market activity.
Asia
South Korea's August Exports Surge 68.7% Year-over-YearKorea Exports +68.7%
South Korea's exports increased for the 15th consecutive month, reaching $98.3 billion in August.
Strong semiconductor demand was the primary driver of this significant export growth.
This export surprise was not yet reflected in Asia's closing prices as of early morning.
Australia's August Housing Prices See Largest Drop Since PandemicAustralia Housing Down
Australian housing prices experienced their largest decline in August since the pandemic began.
Some economists predict a 10% drop from the peak, which would be one of Australia's worst historical downturns.
Construction costs have risen faster than consumer prices, with roofing materials up 77% and other building materials also surging, increasing home insurance premiums.
Australia's Q2 Current Account Deficit Improves to A$27.2 BillionAUD CAD Improved
The current account deficit was A$27.2 billion, better than the expected A$30 billion.
Although worse than the previous quarter's A$25.4 billion deficit, strong exports offset increased imports of oil and cars.
Net exports contributed 0.1 percentage points to Q2 GDP, exceeding market expectations of 0.0 percentage points.
RBNZ Expected to Hike Policy Rate by 25bp, Second Consecutive TighteningRBNZ Hike Likely
The Reserve Bank of New Zealand (RBNZ) is poised to raise its policy rate by 25 basis points tomorrow.
This follows a 4.1% Q2 inflation rate, exceeding the 3.9% forecast, justifying further tightening after the first hike in July.
New Zealand's economy shows signs of weakness with a 5.6% unemployment rate (10-year high) and 1.5% GDP growth.
AUD/NZD Exchange Rates Constrained by Global Bond Sell-offAUD/NZD Constrained
The Australian dollar (AUD/USD) failed to break resistance at 0.7210, signaling potential weakness if it drops below 0.7100.
Australia's 10-year government bond yield rose 9 basis points to 5.166%, a five-month high.
Both the Australian and New Zealand dollars stalled near multi-month highs due to the global bond sell-off.
India's Manufacturing PMI Slows to 5-Year Low (52.8)India PMI Slows
India's manufacturing Purchasing Managers' Index (PMI) slowed to 52.8, its lowest in five years.
This highlights regional disparities in economic performance, contrasting with the Eurozone's strong manufacturing growth.
Japan
Japan 10-Year JGB YieldBreaks 3%
Japan's 10-year government bond (JGB) yield surpassed 3% for the first time since 1996.
This historic market shift reflects Middle East instability and global inflation concerns, with yields tripling in two years.
US Treasury Secretary BessentUrges BOJ Hike
US Treasury Secretary Bessent explicitly urged the Bank of Japan (BOJ) to raise interest rates and abandon large-scale stimulus policies.
This pressure, following a joint yen defense intervention, has increased market expectations for a September BOJ rate hike.
Japan-US Policy TalksCooperation
Japanese Finance Minister Takayama and US Treasury Secretary Bessent reaffirmed the importance of 'orderly' yen fluctuations for global financial stability.
Both nations agreed to continue cooperation towards this goal, though Japanese officials emphasized BOJ policy would be based on domestic conditions.
Japan Q2 Capital Expenditure+1.6% YoY
Japan's capital expenditure increased by 1.6% year-on-year in Q2 (April-June), accelerating significantly from 0.05% in the previous quarter.
This signals improving corporate confidence and provides a basis for an upward revision of Q2 GDP to an annualized +1.1%.
Nikkei 225-0.2%
The Nikkei 225 index closed down 0.2% at 66,215.34, pressured by surging bond yields and a sell-off in technology stocks.
Rising global inflation concerns due to Middle East instability also intensified risk aversion among investors.
Korea
South Korea August Exports+68.7% YoY
South Korea's exports surged 68.7% year-on-year in August to $98.26 billion, exceeding Reuters' forecast of +62.6%.
This marks the 15th consecutive month of growth, driven by an AI-fueled semiconductor boom and robust export demand reflected in a PMI of 52.3.
South Korea 2027 Budget₩821 Trillion
South Korea finalized its 2027 government budget at ₩821 trillion, with significant allocations to boost technology and defense.
This includes ₩2.6 trillion for semiconductor special projects and ₩3.4 trillion for nuclear submarines and strategic weapons.
President Lee on RatesUnavoidable Hikes
President Lee stated that interest rate increases are 'unavoidable' due to economic necessity, while also expressing concern over the high-interest burden on low-income households.
The government also maintained the ₩1.2 billion basic deduction for comprehensive real estate tax on single-family homes, reversing a previous reduction plan.
KOSPI & KRWKOSPI +0.23%
The KOSPI index closed up 0.23% at 6,835.80, despite continued net selling by foreign investors amidst the semiconductor export boom.
The USD/KRW exchange rate hovered near a 13-month low of 1364.3, even as US 10-year Treasury yields rose to 4.778%.
India
Indian Rupee2-Month High
The Indian Rupee surged to a two-month high of 94.8050 against the dollar, driven by aggressive dollar selling by the Reserve Bank of India (RBI).
Traders noted the RBI's 'much more aggressive' intervention, signaling a shift from defending weakness to pursuing strength, even as other Asian currencies weakened.
India August Manufacturing PMI5-Year Low
India's manufacturing Purchasing Managers' Index (PMI) fell to 52.8 in August, a five-year low, and below the forecast of 53.0.
Weakening demand led to a decline in employment for the first time in over two years, signaling a slowdown in economic growth.
Indian Government BondsForeign Outflows
Foreign investors became net sellers of Indian government bonds in August, with ₩8.5 billion (approximately $89.54 million) in outflows via the Fully Accessible Route (FAR).
This marks the first monthly outflow of the fiscal year, reversing a trend of over $5 billion in net inflows during the first four months.
India Q2 GDP+7.8% YoY
India's Q2 GDP grew strongly at 7.8% year-on-year, surpassing Reuters' forecast of 7.1%, driven by robust investment, manufacturing, and consumption.
Despite strong GDP, Indian equities saw limited gains (Nifty 50 +0.2%, Sensex +0.3%) due to Middle East tensions and a 66% probability of a Fed rate hike in September.
Emerging Markets
Ukraine Conflict6th Day Strikes
Russia launched its sixth consecutive day of airstrikes on Ukraine's Kyiv and Odesa regions, resulting in 9 deaths and over 14 injuries.
President Zelensky accused Russia of deliberately targeting export infrastructure at border crossings and ports near Romania.
Poland Manufacturing PMI48.3
Poland's manufacturing downturn deepened for the 16th consecutive month, with its August PMI falling to 48.3, below the forecast of 49.6.
New orders and production both accelerated their decline, and supply chain disruptions from the Iran conflict extended supplier delivery times to their longest since June 2022.
Emerging Europe ManufacturingMixed Recovery
Manufacturing recovery in Emerging Europe showed mixed speeds, with Czech Republic's PMI at a four-year high of 54.1, and Hungary at 51.3, and Greece at 54.4.
In contrast, Poland (48.3) and Turkey (48.1) showed weakness, highlighting divergent manufacturing sentiment driven by differing new orders and supply chain impacts.
Southeast Asian StocksBroad Weakness
Southeast Asian stocks broadly weakened, with the ASEAN index down 0.3% and Singapore down 0.8%, as oil prices surpassed $90 per barrel.
Malaysia's market fell 1.3%, reflecting heightened Middle East tensions, rising oil prices, and broad global bond sell-offs, intensifying pressure on emerging market risk assets.
Hungarian ForintWeakened -0.5%
The Hungarian Forint weakened by 0.5% against the Euro (EUR/HUF 366.85) amidst rising Middle East tensions and oil prices.
Extremely low summer trading volumes, coupled with a strong dollar and oil rally, contributed to increased risk premiums.
Indonesia Central BankNew Governor
Indonesia's parliament confirmed Destry Damayanti as the first female central bank governor, prioritizing economic stability.
She projected 2027 GDP growth at 5.2-6.0% and set a Rupiah target of 17,300-17,800 Rupiah/dollar, emphasizing enhanced oversight of corporate dollar purchases.
Iran Central Bank$2 Billion FX Aid
Iran's Central Bank re-emphasized its sufficient foreign exchange reserves, preparing to inject $2 billion into the FX market to stabilize the currency.
This move counters US Treasury claims of Iran's 'economic war defeat' and aims to mitigate exchange rate volatility.
Russia on Military DrillsProtests US Missiles
Russia formally protested Japan's joint military exercises with the US and Australia, particularly the first deployment of US Typhon missile systems.
The 'Orient Shield' drills (September 8-24) involve 3,700 personnel, the largest ever, which Russia views as a threat to its security.
China
PBOC Curbs Yuan's RiseYuan +4% YTD
China's central bank (PBOC) is slowing the yuan's appreciation after a 4% year-to-date gain.
The yuan traded near 6.7192/USD today, close to its strongest level since February 2023.
The PBOC set its daily reference rate weaker than market expectations to curb further gains, seen as easing international criticism over China's trade surplus.
Manufacturing PMI AcceleratesPMI 51.5
The RatingDog Manufacturing PMI rose to 51.5 in August, up from 50.9 in July and exceeding the 51.0 forecast.
Production, new orders, and exports all accelerated, with strong global AI chip and computer demand driving export growth.
However, business confidence for the next 12 months retreated to its lowest level since January, indicating a cautious economic outlook.
Automakers Face New Overseas RulesNew Guidelines
Chinese regulators issued new guidelines for automakers' overseas operations, emphasizing compliance with anti-monopoly, anti-corruption, and social responsibility rules.
The government warned against frequent and significant price changes in overseas markets.
The guidance aims to protect consumer interests and brand image abroad.
BYD (1211.HK) Sales Surge on ExportsSales +17.8%
BYD (1211.HK) reported total sales of 440,293 units in August, a 17.8% increase year-over-year.
Overseas exports surged 134.5% to 189,466 units, driving four consecutive months of sales growth.
Strong international demand offset sluggish domestic sales.
Shein Shares Drop in Hong Kong DebutDebut -4-8%
Shein shares fell 4-8% on its first day of trading on the Hong Kong Stock Exchange.
The debut followed failed attempts to list in New York and London, amid concerns over US and European tariffs and scrutiny of its business practices.
The delayed listing reflects market worries about the company's growth prospects and regulatory risks.
China Warns Taiwan Over ForumWarning Issued
China's Pacific Affairs Envoy warned Taiwan of "consequences" for attending the opening ceremony of the Pacific Islands Forum in Palau.
The specific nature of the consequences was not detailed.
This signals China's escalating pressure on Taiwan's activities, which Beijing views as threatening regional stability.
Solar Power Leads CapacitySolar #1
Solar power became China's largest source of installed power capacity in July, surpassing coal.
This milestone reflects a structural shift in China's energy mix.
It highlights the country's rapid expansion of renewable energy and its push towards carbon neutrality.
Top Gainers
Detail
Workday (WDAY)
The information technology software company saw strong daily gains.
+5.76%
Domino's Pizza (DPZ)
The consumer discretionary fast-food chain posted solid returns.
+5.40%
Lululemon (LULU)
The consumer discretionary athletic apparel retailer advanced.
+5.05%
ServiceNow (NOW)
The information technology cloud computing company rose.
+4.54%
Schlumberger (SLB)
The energy sector oilfield services giant climbed.
+4.22%
Amazon (AMZN)
The consumer discretionary e-commerce and cloud leader gained.
+3.97%
Charter Communications (CHTR)
The communication services cable operator increased.
+3.57%
Bunge Global (BG)
The consumer staples agricultural commodity firm moved higher.
+3.50%
Expedia Group (EXPE)
The consumer discretionary online travel agency saw growth.
+3.30%
eBay (EBAY)
The consumer discretionary e-commerce marketplace shares rose.
+3.28%
Companies
Eli Lilly (LLY)-0.13%
Announced the acquisition of Merida BioSciences for up to $2.88 billion in cash to expand its autoimmune and allergic disease pipeline.
The transaction is subject to regulatory approval and is expected to close in Q4 2026.
Phase 3b clinical trial for Taltz and Zepbound combination showed superior systemic inflammation improvement and disease activity maintenance for obese adults with psoriatic disease.
Amgen (AMGN)-1.05%
Cholesterol-lowering drug Repatha (REPATHA®) demonstrated a reduced risk of death in high-risk patients for a first heart attack or stroke.
These clinical results could lead to expanded indications and increased prescriptions for the drug.
AMD (AMD)-2.33%
AMD, Cisco, and Saudi AI company Humane are collaborating to build up to 1GW of AI infrastructure in Saudi Arabia by 2030.
Deployment of the first 250MW phase is set to begin in 2027, with AMD Instinct AI accelerator systems already operational in the region.
This project signals continued expansion of data center demand and AMD's entry into the Middle Eastern market.
Intel (INTC)-2.85%
Pre-market stock rose +1.7% on reports that SK Hynix is exploring cooperation with Intel for semiconductor chip manufacturing.
While still in exploratory stages, this potential partnership could signal growth for Intel's foundry business by securing major clients.
Reddit (RDDT)-0.62%
The EU Commission designated Reddit, ChatGPT, and Roblox as 'Very Large Online Platforms' under the Digital Services Act (DSA).
Platforms with over 45 million monthly users in the EU must comply with additional regulatory obligations, including risk assessment for illegal content, within four months.
SpaceXMission Delayed
SpaceX and NASA adjusted the launch schedule for the Crew-13 human spaceflight mission to the ISS.
The postponement is due to an oxidizer leak detected in the Dragon spacecraft's propulsion system, requiring safety checks.