In today’s briefing:
- ECB Accounts for September Bias
- BoK Doubles Down on Pre‑emption
- Philippines: Third Hike Nears the Peak
- Oil futures: Crude off lows as tense US-Iran standoff continues
- The Flightless Hike: Receiving NZD 1y1y Ahead of the September MPS
- The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (August 2026)
- India Twin Deficit Watch: CAD Small; Strong Corp-Tax & GST Revenue Boosts Fiscal
- CX Daily: China Races to Build Its Own Gene-Editing Toolkit — With an AI Assist
- Asian Equities: Foreign Flow into Asia Turned Around in August, Driven by Taiwan and India
- Indonesia Economics: 2026 Budget Projects Consolidation by Assumption
ECB Accounts for September Bias
- July’s unanimous hold masked support for a hike. The new meeting Accounts confirm that another rate rise is likely in September unless the inflation outlook improves significantly.
- The Accounts stress persistent upside cost risks from gas, crack spreads and food, with inflation seen above target into 2027 despite softer underlying pressures.
- Some members see rates as not yet mildly restrictive. Robust credit and resilience tilt the bias towards at least one more hike before an extended data‑driven pause.
BoK Doubles Down on Pre‑emption
- The BoK raised its Base Rate by 25bp to 3.00% in a broadly expected back‑to‑back hike, but the hawkish dot plot now points to 3.25–3.50% within six months.
- Stronger growth and sticky core inflation keep inflation above target for “a considerable time”, making further hikes likely unless data undershoot current projections.
- Housing and household‑debt risks now anchor a more pre‑emptive reaction function, limiting scope for early cuts even if headline inflation edges closer to target.
Philippines: Third Hike Nears the Peak
- BSP’s third 25bp hike to 5.0% was expected as above‑target inflation to 2027 extends a tightening bias and delays any hopes for rate cuts.
- Upside risks from El Niño, oil and wages mean future moves hinge on core inflation, expectations and evidence of second‑round effects.
- Despite weak growth, BSP’s inflation forecasts imply a prolonged pause at restrictive levels, with cuts only likely once price risks and expectations ease.
Oil futures: Crude off lows as tense US-Iran standoff continues
- Crude oil futures were trading lower for a third session on Wednesday, but steadied later in the session as tensions remain high after the US announced a new round of economic sanctions against Iran on Monday.
- Oct26 ICE Brent futures were 1.2% lower at $87.54/b (2032 BST), while Oct26 NYMEX WTI was at $81.99/b , down 0.5% changed versus Tuesday’s settle.
- However, benchmarks pared most of the earlier losses that saw Brent print a low of $85.41/b as the situation in the Middle East remains highly volatile, while a lower-than-expected US crude inventory build helped to steady markets.
The Flightless Hike: Receiving NZD 1y1y Ahead of the September MPS
- Inflation is 1pp above band, but expectations are anchored, unemployment is at a decade high, and domestic inflation is decelerating. The ~4 hikes priced (to ~3.46% terminal) are too rich.
- 2 September MPS is the catalyst: receive NZD 1y1y at 3.90%, target 3.55%, stop 4.05%. Data undershoot May projections; a held or trimmed track leaves pricing two hikes rich.
- The 7 November election adds unpriced optionality. Labour has pledged to restore the employment mandate; a dual-mandate committee facing decade-high unemployment is unlikely to deliver the marginal hikes priced in.
The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (August 2026)
- The healthcare and materials sectors have gained strength and momentum in Hong Kong over the last month, as the overall market has seen broader participation.
- The market continues to see net outflows, although it has technically regained its trend support level, suggesting further gains in 2H26.
- Bloks Group (325 HK) shares have surged on positive news following the announcement of 1H26 earnings. The company initiated a buyback earlier this year and announced its first dividend.
India Twin Deficit Watch: CAD Small; Strong Corp-Tax & GST Revenue Boosts Fiscal
- Corporate tax revenue surged 19.7%YoY and central GST revenue 16.9%YoY in Apr-Jun’26 (Q1 FY27), suggesting a robust economy that comfortably withstood the oil-price shock, likely growing well over 7%YoY.
- The YoY acceleration in GST revenue (despite rate reductions in Sep’25) reflects strengthening private consumption. With exports of goods and services also growing double-digits YoY, the economy is buoyant.
- INR weakened despite the stable current account, mainly on account of large net capital outflows. Debt-creating inflows have stabilised FX reserves, and inflows into equity markets are set to accelerate.
CX Daily: China Races to Build Its Own Gene-Editing Toolkit — With an AI Assist
- Analysis: China Races to Build Its Own Gene-Editing Toolkit — With an AI Assist In a lab in Changzhou, an industrial city in eastern China, researchers at agritech startup Wimi Biotechnology Co. Ltd.
- are doing something that sounds almost too simple: they “cut” a single stretch of corn DNA, let the plant repair itself, and wait to see what new trait emerges — higher yield, a shorter stalk, less water in the kernel.
- (London) — In June 2025, Aqua 1 Foundation, an obscure UAE-based investment vehicle, shocked the cryptocurrency market by announcing a $100 million investment in digital tokens
Asian Equities: Foreign Flow into Asia Turned Around in August, Driven by Taiwan and India
- After 9 months of relentless selling in Asia foreign institutions bought US$6bn in August. Taiwan (US$10.3bn) and India (US$3.15bn) were bought while Korea was sold (-US$7.3bn).
- In 2026 YTD, FIIs have sold US$109.5bn in Korea, US$42.5bn in Taiwan, US$24bn in India. Sharpest FII investment recovery in India: US$5.3bn buying in July-August after US$29.3bn selling in January-June.
- For this FII recovery to sustain, we need the US treasury yields to moderate and the Asian currencies to stabilize. The other necessity, robust Asian earnings, is panning out well,
Indonesia Economics: 2026 Budget Projects Consolidation by Assumption
- Indonesia’s 2027 Budget projects a narrower fiscal deficit of 2.4%, presenting an apparent return towards fiscal discipline after near-misses in previous years.
- But much of the consolidation rests on optimistic macro-assumptions rather than genuine spending compression or revenue uplifts. These assumptions are hostage to likely changes in domestic or external conditions.
- The budget is a ‘satisficing’ response to market concerns rather than genuine course correction. The underlying pressures on fiscal space remain unaddressed.
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