Asia sold the rip overnight as a spike in Japanese government bond yields and a hangover from Monday's US chip rout dragged the region lower into the US open.
The Nikkei 225 fell 2.54%, snapping a five-session win streak, as Japan's 10-year JGB yield pushed to its highest since 1996 on rising odds of a September BOJ hike. The KOSPI told the same story in miniature: it opened up more than 2% on chip strength before closing about 1.6% lower as the semiconductor bid faded. Hang Seng slipped 0.83% to 25,440 while CSI 300 held up relatively well, up 0.58%, even as China's July retail sales and factory output both missed forecast. USD/JPY firmed to roughly 159.5, clawing back some of last week's yen weakness as the dollar softened broadly; USD/CNH sat little changed near 6.73-6.75.
The read-through into the US open is choppy. Monday's session already saw the semiconductor complex down 5.5% and Nasdaq 100 off 1.7%, with 10-year yields near the highest since early 2025 and the 30-year at a 19-year high above 5.3%. Oil is holding near 85 dollars on the unresolved Strait of Hormuz standoff. Today's industrial production and import price prints came in soft, and fed funds futures now price roughly 67% odds the Fed holds in September, up from under 50% a month ago. NVDA and HD prints and next week's Jackson Hole debut from new Fed chair Kevin Warsh are the next tape-movers.
The risk: another leg up in long-end yields or a hawkish BOJ signal reignites the yen-carry unwind and drags US futures down with the chip complex again; a stabilization in yields or a dovish Fed read flips this into a relief bounce fast.