The dominant macro driver overnight is the renewed surge in US Treasury yields, with the 2-year climbing 11bp to 4.92% and the 10-year up 7bp to 5.24% — levels that price a higher-for-longer Fed path and are approaching multi-decade highs, compressing equity risk premiums globally. This yield move came alongside a backdrop of weak US data (August job openings at 7.097m versus 7.228m expected, softer consumer confidence) and an RBA that unanimously hiked 25bp to 4.60%, its highest cash rate since approximately 2011, citing energy-cost pass-through and AI-driven goods price pressures — reinforcing the message that major central banks are still tightening into slowing demand. Today's US Core PCE (forecast 0.3% m/m) and Australian CPI prints (forecast 4.1% y/y) are the next live tests of that narrative.
For Asia-Pacific investors, the cross-asset pressure is concentrated in rate-sensitive and export-oriented names. USD/JPY holding at 157.38 despite the BoJ's September 18 hike to 1.25% underscores how the yield differential still dominates yen dynamics, squeezing Japanese importers and energy buyers even as bank stocks benefit from the normalisation trade. The Nikkei VIX surging 35.52% to 27.51 — against a VIX of only 16.04 — signals Japan-specific stress, compounded by sharp losses in autos (Mitsubishi Motors -4.93%) and pharma (-1.86% sector) in the prior TOPIX session. CNY's 0.12% firming to 6.7025 reflects PBOC support and the State Council's counter-cyclical policy signals, but the SSE Composite fell 1.67% and KOSPI collapsed 2.70%, indicating that broader risk-off from US yields and oil is overriding regional policy stimulus at the index level.