The dominant overnight macro driver was a sharp steepening of the US Treasury curve, with the 10-year yield climbing 5 bp to 4.68% and the 30-year reaching 5.25% (+4 bp), while the 2-year added only 2 bp to 4.17% — a configuration that signals markets are pricing duration risk and longer-term inflation uncertainty rather than near-term Fed tightening. The VIX jumped 6.60% to 15.19, reflecting a genuine uptick in hedging demand even as front-end rate-hike odds for September fell to roughly 35%, down from 55% a week prior. Gold surged 2.14% to $4,474.20/oz and crude oil rallied sharply — WTI up 2.83% to $84.73/bbl, Brent up 2.67% to $90.88/bbl — with the simultaneous bid in both assets pointing to a geopolitical risk premium layered on top of the rates repricing, most likely tied to ongoing Middle East and Hormuz transit concerns.
For Asia-Pacific, the cross-asset read is unambiguously mixed. USD/JPY edged higher to 159.47 despite the BoJ's hawkish tilt, suggesting the yield differential still dominates yen direction even as 10-year JGB yields press multi-decade highs above 2.9%; Japanese exporters like Toyota and Sony remain in a structurally favorable FX environment, but rising imported energy costs via the yen-oil cross are a countervailing pressure. The HKEX fell 1.10% to 25,116.85, the sharpest regional decline, reflecting the dual headwind of rising US long-end yields and weak China domestic demand data — July Retail Sales at just +0.5% y/y and Property Investment at -19.2% y/y. Australian materials names face a specific squeeze: ASX Materials dropped 2.58%, the worst ASX sector, as copper at $6.611/lb and iron ore at $95.17/t offer only marginal support against the China demand narrative. Korean assets were the clear outlier, with the KOSPI surging 2.42% to 6,977.94, the strongest regional performer, likely reflecting tech and semiconductor-linked flows.