Macro

• Bank Indonesia held its policy rate at 5.75%, as expected, prioritising rupiah stability while macroprudential and fiscal measures support growth.
• Near-Term cuts are unlikely as Fed tightening, a strong dollar, weak portfolio inflows and higher oil prices constrain BI’s policy flexibility.
• A prolonged hold is most likely; renewed rupiah or inflation pressure could trigger a hike, while cuts require sustained external stability.

Highlights

• El Niño expected to strengthen, with nearly 100% persistence probability through February 2027

• Indonesia wildfire emissions reached 19.7 million metric tons CO2 in early September

• August 2026 was the hottest August globally, intensifying rubber supply concerns

• AI’s Next Battle Is Not Models — It Is the US$4tn+ Fee Pools Around Them, From Financial Services to Advertising and Information
• Silicon Valley Has the Scale and Cost Advantage; Wall Street Has the Licences, Balance Sheets and Relationships to Defend the Fortress
• Our Outcome: A Bifurcated Oligopoly — AI Captures Unlicensed Thinking, While Regulated Incumbents Defend Clients but Surrender Pricing Power

• The standard Central Bank response to higher inflation is to raise interest rates, but the impact on an economy will depend on a) what is causing the inflation and b) the nature of the balance sheets involved.

• Simply following the Fed risks bad outcomes for Europe and the rest of the Anglo Saxon Markets.

• Inflation at the moment is largely cost push, not demand pull, certainly not outside of the US.

• Crude oil futures rebounded strongly on Wednesday to halt the week-long losing streak, with investors unconvinced that the US and Iran are nearing a deal to end the war.
• Nov26 ICE Brent futures were 4.5% higher at  $103.69/b (2038 BST), halting a run of five straight losses, while Nov26 NYMEX WTI was at $92.73/b , up 2.4% versus Tuesday’s settle.
• The higher prices came after Tuesday’s high-level talks led by White House Middle East envoys Steve Witkoff and Jared Kushner, while Foreign Minister Abbas Araghchi headed the Iranian delegation.

• Flash PMI balances broadly increased in September, despite the intensifying energy supply shock. It has so far been shrugged off, just like the tariffs last year.
• Services balances had fallen in Q1 before the conflict began but have broadly recovered all the lost ground even without the conflict ending.
• National services balances are broadly above their medians of the past year and decade, so demand is not depressed and can’t offset excess inflation in policy trade-offs.

• As we anticipated, Iran President Masoud Pezeshkian’s speech before the U.N. General Assembly was not “benevolent” by any stretch of the imagination. Oil prices rebounded in response.                 
• The earlier oil price weakness appeared to reflect optimism regarding the “sideline” meetings between Iranian delegates and Jared Kushner and Steve Witkoff.                                       
• With respect, however, Iran has previously indicated they would not negotiate seriously with the two who Tehran characterizes as “mere real estate developers.”          

• In Depth: Why Geely’s Founder Broke With Chinese Business Tradition for His Succession When Li Shufu stepped down as chairman and executive director of Geely Automobile Holdings Ltd.
• in August, it signaled far more than a routine leadership change at one of China’s largest private carmakers.
• FINANCE & ECONOMY Hong Kong Moves to Ease Listing Rules on Major Deals, Spin-Offs 

• Remittances keep rising! Urban CPI a touch lower, core inflation higher!                           
• MPC meeting on Thursday! NBE to acquire Banque Misr’s UAE branches.
• The start of divestments finally?

• The Hong Kong market continues to consolidate, holding above its long-term support levels but without the momentum to break out to new highs.
• Healthcare is the only sector in positive territory in September.  The materials sector benefited from gains in the gold sector.
• ZTE (763 HK) is maintained a BUY at CMB International with a +48% 12-month upside target price.  The company is transitioning to international and AI sectors for growth.

• Elevated portside inventories and a fresh WoW increase suggest Golden Week restocking has yet to translate into meaningful inventory drawdowns.
• Options positioning is turning increasingly constructive, with call OI building at strikes 105 and 110. OI PCR of 0.61 reinforces the bullish bias.
• Managed money extended its bearish positioning for a 12th straight week, trimming long exposure by ~4% while increasing short positions by ~3%. 

• The Fed has embarked on a rate hike cycle and one more hike in December seems baked in. Treasury yields hovering at higher than 5% seem to portend more hikes.
• Asian yields started rising and PE peaked a year ago. Foreign flows, also impacted by US yields, dropped massively in 2025-26. Valuations and flows are anticipating the bad news already.
• Banks, insurance and basic materials should do well in an inflationary and tighter monetary environment. These sectors are also cheap in relation to their future earnings growth and ROE.

• In his speech to the U.N. General Assembly, President Trump stated that a “deal” with Iran could be made after the U.S. midterm elections.                  
• This suggests to us that there remains the possibility of the U.S. launching a major strike, perhaps on Pickaxe Mountain, before the midterms, as we previously discussed.                                       
• Such an attack might satisfy the domestic base and yet allow President Trump to offer some form of “carrot” to Iran after the midterms to achieve his “off ramp.”          

• Crude oil futures dropped for a fourth straight session on Monday, as expectations that Saudi Arabia could soon restore some flows through its damaged East-West Pipeline eased concerns over supply disruptions.
• Nov26 ICE Brent futures were 3.6% lower at  $100.11/b (2119 BST), while Nov26 NYMEX  WTI was at $92.04/b , down 4.2% versus Friday’s settle.
• Brent earlier traded at an intraday low of $98.98/b, dropping below $100/b for the first time in two weeks.

• Crude oil futures remained volatile on Tuesday as talks around this week’s UN gathering got underway, including backchannel diplomacy between the US and Iran, while Saudi Arabia is preparing to restart exports from the Red Sea.
• Nov26 ICE Brent futures were 1.9% lower at $98.40/b (2124 BST), while Nov26 NYMEX  WTI was at $89.73/b , down 2.6% versus Monday’s settle, leaving both benchmarks retreating for a fifth session.
• Brent traded down to a two-week low of  $97.43/b after Japan’s Kyodo agency reported that a senior Iranian official told the US that Iran would reopen the blocked Strait of Hormuz “within seven days” if Washington accepts Iran’s demands, including lifting a military blockade of Iranian ports.

• One word: bombast. Of 14 testable claims in Trump’s UN speech, two hold up. The structure is the one he used on North Korea in 2017. 
• The structure (annihilation threat, self-praise, a deal that is always close) is identical at the same podium in 2017. He will not change, because markets keep rewarding the pattern.
• His Iran stance now changes daily and the deal is dated to the election. Expect a Hormuz headline before 3 November, and more volatility after. 

• Global air freight rates edged up again last week according to the latest data from TAC Index, calculating agent for the Baltic Air Freight indices and leading price reporting agency for air freight markets.
• The global Baltic Air Freight Index (BAI00) gained +0.9% over seven days to September 21 – leaving the index now at +20.9% versus where it was a year ago, with rates remaining strong in the runup to the traditional peak season.
• With jet fuel rates now up more than double at +116.5% year-on-year to September 18, according to the IATA Jet Fuel Price Monitor, pressure for rates to rise further would seem to be increasing.

• Cover Story: Jeju Missing Persons Scandal Tests Seoul’s Criminal Justice Overhaul Along South Korea’s Jeju Island, the Jeju Olle Trail passes through villages, farmland and coastal roads.
• In Suwon-ri, a community of about 500 households in the northwestern township of Hallim-eup, a narrow palm grove sits beside a road, about 200 meters from the village office and 400 meters from a house.
• BlackRock China Unit Wins QDII License for Overseas Investment BlackRock Fund Management Co.

• WTI gained 0.25% for the week but reversed sharply from its midweek highs as Saudi Arabia restored alternative export flows and fears of a prolonged supply loss eased.
• Options volatility and skew fell after the initial supply shock, while managed money cut net longs, pointing to more cautious positioning as WTI slipped below USD 100.
• Energy ETFs lagged crude despite selective AUM support, while Halliburton enters Q3 with North American pricing, Middle East activity and Venezuela as key catalysts.

• India reversed its entire relative gain against EM. The near 50% relative drawdown is the deepest and longest since 2012, so we’re positioning for improvement.
• Bottom-Decile losses in India have historically preceded strong rebounds. Although relative washouts offer no comparable evidence. We can scale up on an absoute basis.
• Opportunity in the middle of the index. We built a tiered watch list from the middle cohort, scaling toward equal weight as confirmation arrives.

• In its recent Investment Strategy Insights publication, UBS makes the case for expanding commodity exposure beyond traditional safe-haven assets such as gold and the more familiar energy and industrial metals segments.
• The underlying argument is that commodities can provide additional sources of return, portfolio diversification, and protection against inflation, geopolitical disruptions, and structural supply constraints – something we argue for a couple of years now
• UBS identifies several structural trends supporting commodity markets. 

• BoJ’s rate hike failed to lift the yen, as cautious guidance kept markets unconvinced that a faster tightening cycle was coming.
• Record FX intervention has bought the yen some breathing room, but narrowing the yield gap will require a sustained hawkish BoJ stance.
• Options still flag downside risk, yet institutions are building bullish exposure, creating a notable divergence in yen positioning worth watching closely.

• This week’s macro calendar is fairly light after last week’s blockbuster US interest rate move.
• The standout release stateside is Wednesday’s S&P Global flash manufacturing and services PMIs for September, which will give investors a good understanding of how growth is holding up post-hike.
• Thursday brings weekly jobless claims and new home sales, but the bigger story that day is the scheduled Trump-Xi summit in Washington.

• The Fed raised its policy rate expected. Chairman Warsh is seeking to speed up inflation’s decline towards 2%. Interest rate futures are discounting more hawkish policy compared to FOMC members.
• The Fed’s policy rate will remain higher for longer. Higher productivity growth from artificial intelligence raises the neutral policy rate due to high prospective returns on future capital spending outlays.
• Concerns about US equities have risen due to higher Treasury yields after many years of suppression by the Fed but a repeat of the 2022 equity market correction is unlikely.  

Highlights

• Natural rubber exports rose 10.7% MoM to above 110,000 tons in June

• Export earnings jumped 17% as higher prices offset lower shipments

• China shipments surged 36.4%, the strongest growth among major destinations

• Weather and geopolitical risk are compounding across agricultural origins this edition, from West Africa to the Black Sea.
• Treefera’s own stress readings show West Africa’s current cocoa crop in much better shape than feared even as a firming El Nino clouds the 2026/27 outlook, while Black Sea strikes choke wheat exports and positioning and import-driven swings add further volatility in corn and sugar.
• Ghana’s cocoa drought stress has fallen 87% year on year, even as the 2026/27 main crop remains a Watch under a firming El Nino, per Treefera Market Intelligence’s current stress read.

• Saudi’ GDP contracted by 4.7 % y/y in Q2 2026. CPI stable.

• Qatar’s fiscal deficit the largest in ten years.

• Kuwait, Cabinet allows the Future Generations Fund to be tapped. None of these headlines impact markets.

• Yesterday’s selloff was apparently catalyzed by a combination of optimism regarding the restart of the East-West Pipeline and a possible U.S.-Iran “deal.”                 
• In terms of any U.S.-Iran “deal” that has any degree of substance, as we have said several times, we will believe it when we see it.
• In this context, whenever funds felt a “deal” was in the offing, it presented an attractive buying opportunity.           

• Crude oil futures were slightly softer late Friday after paring most of the early losses on Friday, amid reports that major disruptions on Saudi oil supplies were set to continue through October.
• Nov26 ICE Brent futures were 1.1% lower at  $103.66/b (1830 BST), versus an intraday low of $101.92/b, while Oct26 NYMEX  WTI was at $100.88/b , down 1% versus Thursday’s settle.
• It left Brent slightly lower on the week after crude pulled back when Saudi Arabia indicated it could restore about half the capacity of its East-West pipeline within days by bypassing a damaged section, with full flows potentially returning by the end of October.

• There appears to be no letup in the Houthis-Saudi conflict, although as we anticipated, Pakistan and Türkiye are offering “assistance” to Saudi Arabia under the Mecca Joint Defense Agreement.   
• At the same time, there are “rumblings” about a renewed U.S. military campaign against Iran, including a possible strike against Pickaxe Mountain.             
• Nonetheless, at this juncture we would retain our previously delineated trading range for the prompt NMEX crude oil contract of $95.00-$110.00 per barrel.          

• Foreigners sold a record ₩148trn of Korean equities in 1H26, with Samsung and SK hynix accounting for ~87% of the exit.
• Retail absorbed the selling at the top, but September turnover has halved and leveraged demand is now fading as the buyback became an exit door.
• Position for the structural bid: favour value-up banks and holdcos, be selective on Samsung/SK hynix, and avoid leveraged AI and IPO exposure.

• Corporate Japan absorbs ¥20trn of equity in 2026 against ¥10trn the market must clear; on a share-count basis about 2% of market capitalisation is being retired.
• Seventeen IPOs raised ¥144bn in 1H26 against ¥16.2trn of buybacks and 128 delistings; insurers’ zero-holding targets run to FY2029–30, but disposal pace is slowing.
• Post-BoJ hike: overweight cash-funded buyback names and take-private candidates; underweight Growth market, JGB duration and yen cash; neutral yen, hold Japan equities unhedged.

• A review of recent events/data impacting our investment themes and outlook
• The Boj, the Fed, and the ECB all tightened rates this week – with different outcomes
• Tightening liquidity globally, but still no signs of a major top

• Leaders of top US AI companies have said human extinction is possible and that AI model development should be slowed.  
• With upcoming IPOs and rapid market-share losses to open-source Chinese models, safety risk declarations and calls for government regulation could help these firms cement an oligopoly in the US market.
• China has read this playbook clearly, calling it “malicious competition” and pivoting its strategy: building domestic chip infrastructure, releasing ultra-cheap open-source models, and positioning itself as the open-AI champion. 

• The BoJ’s 25bp hike to 1.25%, in line with consensus, came with an ongoing cautious tightening bias as inflation nears 2% and FX risks stay elevated.
• A 7–2 split vote and below‑target core CPI argue for gradual, data‑dependent hikes rather than a rapid or front‑loaded rate path.
• Yen weakness after the decision shows markets still see BoJ as lagging behind necessary action, leaving pressure for further rate rises if inflation and FX prove problematic.

• UK inflation and unemployment data confirmed a significant hawkish drift in the BoE’s forecast, but its reluctance to respond disappointed overly hawkish market pricing.
• The Fed and BOJ both hiked like the ECB and are likely to go again, although FX traders also punished the BOJ’s caution. Doves were beaten by peer pressure.
• Next week is the turn of the Norges Bank, SNB and Riksbank to announce their policy decisions, with the latter two being some of the increasingly rare dovish holdouts.

• Indonesia’s currency, reserves, and consumer confidence have stabilised since 2Q26’s turmoil, but the recovery’s foundations remain narrow and may renew amid external stresses. 
• External risks are mounting — Fed hikes, Middle East tensions, agricultural pressures — any of which could inflict renewed turmoil for Indonesia’s economy. 
• Prabowo’s sacking of Purbaya in favour of technocrat Suahasil Nazara is positive, but the rapid turnover signals institutional turbulence in a key economic policy role. 

• A larger-than-usual cargo with a combination of Group II light and heavy grades was set to load from Taiwan in the coming days, with India a likely destination.
• A large cargo of Group II base oils loaded from Taiwan at end-August headed to India, with arrival due this week.
• A large cargo with a combination of Group II light and heavy grades loaded from Taiwan at end-July headed to the US Gulf coast, with arrival due in late-September.

• Analysis: Plunging Yields and Debt Swaps Are Rewiring China’s Credit Market Traditional bank loans have fallen to less than 60% of China’s total credit supply for the first time in seven years, as plunging interest rates drive corporate and government borrowers into the bond market.
• China Tightens Grip on Private Funds With New Monitoring Center China is preparing to set up a new Fund Monitoring Center to centralize oversight of the country’s public and private funds, in what would mark one of the biggest regulatory overhauls for the asset management industry in years, Caixin has learned.
• Hong Kong to Accelerate Push for International Gold Trading Hub Hong Kong plans to accelerate the development of an international gold trading market and is considering increasing the gold reserves of its Exchange Fund, Chief Executive John Lee said Wednesday.

• Crude oil futures early Friday continued to drift lower amid growing optimism that disruptions to Saudi crude after the East-West pipeline attack would be less severe than initially feared.
• Nov26 ICE Brent futures were 0.85% lower at  $103.86/b (0115 BST), while Oct26 NYMEX WTI was at $100.97/b , down 0.9% versus Thursday’s settle.
• It left benchmarks relatively flat on the week as crude pulled back after Saudi Arabia indicated it could restore about half the capacity of its East-West pipeline within days by bypassing a damaged section, with full flows potentially returning by the end of October.

• Crude oil futures retreated for a second session Thursday on hopes that losses from the Saudi pipeline attack would not be as severe as initially feared, while there has been a midweek slowdown in military strikes.
• Nov26 ICE  Brent futures were 1.7% lower at  $104.03/b (2053 BST), while Oct26 NYMEX WTI was at $101.25/b , down 1.15% versus Wednesday’s settle.
• Oil prices had already dropped around 3% Wednesday after Saudi Arabia stepped up efforts to restore its East-West pipeline, easing concerns over how much crude supply will remain disrupted by last week’s drone attack on a major pumping station.

• The Fed hiked by 25bp to 3.75–4.00%, with the dots signalling at least one more increase this year and a long plateau for rates at that higher level.
• Its median rate path is now at 4.1% for 2026–27 and 3.9% for 2028, in a hawkish shift relative to June’s dots and the consensus held until recently.
• A rise in the longer‑run rate to around 3.25% implies a structurally higher neutral 𝑟∗ that pressures peers to reciprocate. We believe the truth is likely even higher than this.

• The BoE’s reiterated 6-3 vote for no change was an unsurprising ongoing failure to rise to the challenge, unlike its peers. But at least members are on course for November. 
• Reliance on a low neutral rate and expectations being anchored at 2%, despite all evidence to the contrary, are critical biases pushing the BoE’s policy failure to persist.
• QT’s expensive mistake is belatedly softened by selling gilts to the DMO, but, like a November hike, this is too little, too late. The fiscal cost could have been avoided.

• In the past several days, Korea’s National Assembly passed an amendment to the Capital Markets Act, codifying a bipartisan compromise known as the “50%+1” rule for tender offers.
• I do not like the new 50%+1 tender offer system in Korea, although it is slightly better than the existing tender offer system in Korea.
• What about the remaining 49.99% of the minority shareholders? Clearly, these remaining minority shareholders are not treated fairly. 

• Brazil’s Copom cut the Selic 25bp to 13.75%, in line with consensus. This keeps a restrictive stance as de-anchored expectations and upside inflation risks persist.
• Above‑target IPCA expectations mean future easing depends on services disinflation developing further and a steadier fiscal‑policy backdrop.
• Global shocks and domestic demand risks keep the rate path data‑driven, with scope for pauses and only cautious further cuts from this lower level.

• Hong Kong’s IPO + placement pipeline has created an estimated HK$1.2trn of net absorbable supply, equivalent to ~5% of free float.
• Thin floats, six-month lock-ups and rising rates are weakening IPO absorption, while A/H discounts point to venue-specific liquidity stress.
• Positioning: favour A-shares, HK cash-returners and HKD cash; underweight the 2026 IPO cohort until supply exhaustion becomes visible.

• India’s 2026 net equity supply is about ₹7.7 lakh crore, 3.7% of free float. The IPO is the smallest line; foreign selling and promoter/PE exits dominate.
• Households absorb it on SIP autopilot, but 51% of August inflows went to small/mid-caps while foreigners sold large-caps. Nifty is down 11% YTD, 23% in dollars from peak.
• OVERWEIGHT large-caps versus mid/small in three gated tranches; UNDERWEIGHT the 2025–26 IPO cohort and INR duration. 

Highlights

• MRF reports a 10% increase in revenue but a 6.52% decline in net profit 

• Apollo records strongest YoY quarterly growth in 14 quarters, at 15.6%

• JK Tyre and CEAT see profitability contract sharply despite continued demand momentum

• In Depth: China’s Auto Export Boom Spurs Push to Manufacture Overseas
• China’s auto export engine was in overdrive in August, shipping more than 1 million vehicles for a third straight month.
• The momentum is fueling expectations that full year exports will hit 10 million cars.

• Yesterday’s oil market behavior once again helped support our scenario of a broad trading range for the prompt NYMEX crude oil contract for the time being.                
• More analysts are stating that oil prices are likely to “grind higher,” but no one appears to be assigning a dollar value to what the peak might be.                                     
• At the risk of being completely “buried” by our price scenario, we would suggest the odds of a material further gain in oil prices are less than a further retracement.           

• Inflation’s August rise matched final forecasts but was 0.3pp above the BoE’s view from July, with resilient services driving the upside along with energy prices.
• Airfares were surprisingly soft, perhaps skewed by sampling and imputation. Underlying price pressures more broadly are still annualising to 3% amid excessive expectations.
• Energy price rises have quadrupled since June’s temporary lows in an intensification of the hawkish shock. The dovishly biased MPC members shouldn’t block a November hike.

• Washington is betting on Venezuelan oil: NABEP gives the U.S. unprecedented influence over future production, including equity, governance rights and priority access to output.
• The supply impact is distant: NABEP’s current production is far below its target, while infrastructure, capital and field development could push meaningful new volumes into the 2030s.
• Hormuz remains a different story: Venezuelan production cannot offset today’s disruption risk, leaving the current geopolitical premium largely intact despite the long-term supply option.

• Sentiment: Cautious Bearish, on a record managed-money long meeting a report that missed on the bearish side, with no flat-price information advantage in a settled crop.
• Treefera’s crop size agrees with the government’s, so the national number holds no edge.
• What is left to trade is which states grew the corn, and who is holding the position. Both sit outside the balance sheet the market is still trading.

• The FOMC unanimously (12-0) voted to raise the Fed Funds rate by 25bp to 3.75-4%, and chair Kevin Warsh emphasised his determination to achieve price stability (PCE inflation of 2%YoY). 
• The median forecast by FOMC members is 4.1% unemployment for the next 3 years, and another 25bp hike in FF rates this year, enabling 2027 inflation to moderate to 2.3%. 
• M2 is growing at a steady 5%YoY (following extreme volatility in Apr’20-Mar’24). Consequently, inflation is likely to moderate (barring oil shocks). No rate hikes in 2027, good for markets. 

• Sentiment: Cautious Bearish, conditional on Black Sea export disruption easing
• Chicago SRW wheat futures (ZW) December 2026 closed at $7.4125 per bushel on 10 September.
• The rally primarily reflects the Russia-Ukraine conflict disrupting Black Sea exports.

• Cautious entry: Indonesian stocks are stabilizing. We may consider a small absolute long on a 6-12-month horizon, either on the country level or with a basket of three stocks.
• Absolute for now: Historically, past downside extremes in Indonesian stocks preceded positive absolute returns 6-12-months forward, but relative performance remained weak over the same time horizon.
• Relative later: Our framework does not support an overweight to Indonesia vs. EM or Asia Pacific until relative trend signals improve. If you’re already underweight, trim it.

• Crude oil futures were drifting lower on Friday but held most of the solid weekly gains as tensions remained high across the Middle East.
• Nov26 ICE Brent futures were 2.5% lower at  $104.92/b (2013 BST), while Oct26 NYMEX WTI was at $100.45/b , down 2% versus Thursday’s settle.
• This week’s huge escalation in the US-Iran conflict had lifted benchmarks by over 10% and taken the two-week gains to 20% after hostilities flared again, pushing benchmarks to four-month highs.

• Yesterday’s bout of NYMEX “profit taking” helps confirm our trading-range scenario, but given this market volatility, it still may be premature to confirm with conviction.                 
• The latest EIA weekly data for implied distillate fuel oil demand continue to reveal a possible moderating trend in U.S. manufacturing activity, thus the stats bear monitoring more than ever.                                   
• If the economy is now finally beginning to respond more adversely to higher oil prices, hopefully the Fed rate hike will not add any fuel to the fire.          

• Brent crude futures surged to near four-month highs on Thursday as investors eyed escalation in the Middle East, monitoring critical energy infrastructure, shipping and strategic waterways.
• Nov26 ICE  Brent futures were 6.5% higher at $107.84/b (2042 BST), while Oct26 NYMEX WTI was at  $102.73/b , up 7% versus Tuesday’s settle.
• Brent closed above $100/b for the first time since July in the previous session following a wave of shipping attacks as the US and Iran intensified tit-for-tat strikes, extending gains Thursday as the regional conflict expanded into Yemen once again.

• Crude oil futures continued to ease early Thursday on hopes that losses from the Saudi pipeline attack would not be as severe as initially feared, while there has been a midweek slowdown in military strikes.
• Nov26 ICE  Brent futures were 1.4% lower at  $104.37b (0155 BST), while Oct26 NYMEX WTI was at $101.24/b , down 1.15% versus Wednesday’s settle.
• Oil prices had already dropped around 3% Wednesday after Saudi Arabia stepped up efforts to restore its East-West pipeline, easing concerns over how much crude supply will remain disrupted by last week’s drone attack on a major pumping station.

• The ONS remembered to conduct the LFS again in July, and responses were resilient after two months of imputation. Unemployment held at 4.9%, contrary to dovish views.
• June’s high single-month rate reflects a cohort that leaves the survey in September, potentially cutting the UR by 0.1pp then. Fundamental signals remain broadly stable.
• Wage growth measures range from 2.9% to 5.1%, with outliers biased and the truth probably around 4%, which is too high to be consistent with the inflation target.

• Cover Story: The Gray Market Behind a Cross-Border Investing Boom
• In the summer of 2026, two cross-border investment blowups rattled investors from the Chinese mainland to Hong Kong and landed on the desks of Hong Kong police investigators.
• Chinese Retail Rush for U.S. Tech Stocks Drains Fresh Offshore Quotas

• Japan’s 30-year yields 4.16%, 236 basis points over the Bank of Japan’s neutral midpoint. Part is fiscal premium; the rest is the price of a domestic bid returning at 4%
• Post-Covid inflation was supply-driven, imported through the yen, oil and food. Inflation excluding food and energy never exceeded 2.7%. Real wages are rising, consumption grows 1%: neutral, not above it.
• The buyers’ strike is ending. Life insurers sold ¥2.1 trillion of super-longs in FY2025 and are buying again; Meiji Yasuda doubled its plan; GPIF is pressed to add domestic assets.

• Global air freight rates edged up again last week according to the latest data from TAC Index, the leading price reporting agency on air freight markets and calculating agent for the Baltic Air Freight indices.
• The global Baltic Air Freight Index (BAI00) gained +0.2% over seven days to September 14, with the impact of surging crude oil and jet fuel prices in recent days yet to be reflected in rates globally – but with the index already at elevated levels of +20.2% year-on-year.
• With crude oil back over $100 per barrel and jet fuel prices now up over +100% YoY according to the latest Platts data, it seems likely rate levels will come under renewed upward pressure well before we reach traditional peak season in the coming weeks.

• Oil prices surged yesterday in response to a further escalation of the Houthi-Saudi conflict, which resulted in a closure of the port of Yanbu and damage to the SANREF refinery.                 
• There is as of yet no indication of any attempt at diplomacy to resolve the situation, although the Houthis claim that transit through the Bab el-Mandeb is “safe.”                                  
• In terms of trading, given the risk of either further oil price gains or this market turning on a dime via a ceasefire/diplomacy, we would continue to concentrate on spreads.          

• Inflation shocks have become more frequent.  Central banks will show greater commitment to their chosen inflation targets, and forward guidance will no longer determine the future path of policy rates.
• More proactive measures by central banks to keep inflationary expectations well-anchored implies more volatile short-term interest rates compared to their long-term counterparts in an environment of higher and volatile inflation.
• US Treasury bond investors will probably demand a higher term premium until they are comfortable with the Fed’s policy reaction function under new leadership without forward guidance.

• Hong Kong imported almost 100 tonnes of Russian gold in 2026’s first seven months, while July transactions showed that Delivery Connect, central clearing and OTC execution can work.
• International-Bank financing is the next test, with global gold OTC derivatives already exceeding US$1.1 trillion outstanding, showing the financial activity that accepted bullion can support beyond physical delivery.
• Longer term, a large pool of internationally accepted bullion could deepen financing and trading beyond each new shipment, extending Hong Kong’s role from physical delivery to offshore gold markets.

Highlights

• Natural rubber production surges 22% MoM in June to 61,000 tonnes.

• Compound rubber imports jump 46% year-on-year to 108,148 tonnes in Q1.

• Natural rubber consumption fell 6.1% year-on-year to 341,000 tonnes in Q1

• Analyzing last 18 year’s year-on-year earnings growth patterns, we conclude that Asian earnings are highly cyclical, with average peak-to-trough length of 24-30 months, unless driven by a sharp liquidity spike.
• Korean and Taiwanese earnings cycles are at their peaks and HK/China is close. Among the large markets, only India is at the bottom of its earnings growth cycle. 
• Onshore China valuations could stay flat; Taiwan PE could correct more. HK and Korean PE should rise. Indian valuations could correct slightly, in line with previous earnings cycle bottoms.

• Sentiment: the froth is gone. Investor sentiment has cooled sharply and is now, at most, moderately bullish.
• Technology SMA near all-time highs. Sentiment is close to all-time highs. Not an immediate sell signal, but a reason to test the Tech case and make sure conviction remains high.
• Gold: getting hot again. Bullish sentiment is building again across indicators, pushing our SMA back to the 96th percentile. Not quite at recent extremes, but close.

• In Depth: China’s Diagnostic Firms Bet on a New Front in Global Health (Johannesburg, South Africa) — For years, funding for global health aid has flowed into this complicated, vibrant metropolis to address public health crises including HIV and AIDS and tuberculosis (TB).
• Analysis: China Adopts Market-Driven Solution to Stale Loan Rate Benchmark For nearly seven years, China’s commercial lenders have relied on a single anchor to price their loans — the loan prime rate (LPR).
• Now, the country’s banking system is testing the waters with a dynamic new benchmark.

• A key element in the equation to watch closely is the interplay between Iran, Saudi Arabia, and the Houthis and how ultimately the Strait of Hormuz issue is resolved.                
• Saudi Arabia postponed a meeting with Iran and other Gulf states due to intensified Houthi attacks on Saudi military and energy assets. Thus far and critically, Abqaiq has been spared.                                 
• If Iran can somehow convince the Houthis to “tone it down”, there is the possibility of an agreement to “manage” the Strait of Hormuz without the United States.         

• The IRI/CCSR prediction plume goes out every month and travels far — onto commodity desks, into insurance notes, through agricultural outlooks.
• It is among the most widely shared forecasts in macro, and among the least well read.
• We backtested all 291 plume starts since May 2002, roughly 6,800 model runs, against the observed Oceanic Niño Index. Three things stand out.