Fed Rate-Hike Bets Ease on Tame CPI; Tech Shares Rally | The Asia Trade 8/13/2026

Tame U.S. Inflation Eases Fed Hike Concerns [0:18]

• Asian stocks are set for gains as a tame U.S. inflation report eases concerns of a Federal Reserve hike.
• The July CPI reading suggests easing pressure on the Fed to raise interest rates.
• The fading impact of energy price shocks from the Iran war is noted, despite ongoing uncertainty.

  "The core inflation coming in subdued that takes some of the pressure, as Sherry mentioned, off the Fed."

Treasury Auction Yields Spike [0:48]

• An auction of 10-year U.S. treasuries drew the highest yield since the 2007 financial crisis.
• This is a concern for the upcoming 30-year U.S. Treasury auction.
• The U.S. budget deficit was announced as 25% worse than expected, over $400 billion for July.

  "They had a 10-year auction last night. They had to produce the highest yield since 2007 to get the bonds cleared."

Tech Earnings in Focus: Cisco and Cerebra [1:07]

• Tech earnings are in focus with Cisco's quarterly revenue and profit beat failing to meet investors' high expectations.
• Cerebra's stock tumbled as hardware sales declined.

  "Tech earnings in focus with Cisco's quarterly revenue and profit beat failing to meet investors' high expectations and Cerebra's tumbling as hardware sales decline."

Tencent ADRs Plunge on AI Spending [1:18]

• Tencent ADRs plunged as markets remain skeptical that its increased AI spending will allow it to catch up with rivals.
• The company more than doubled spending on AI projects and computing last quarter.

  "Plus, Tencent ADR's plunge with markets skeptical that its big boost in AI spending will see it catch up with rivals."

Fed Policy Outlook Post-CPI [2:37]

• Christopher Condon, leading Fed coverage, discusses the implications of the CPI data for the September meeting.
• He notes that while the report is not bad news, it doesn't significantly change the math for a September hike.
• Hawkish policymakers are unlikely to be swayed to a dovish stance by this report.

  "I think investors outlook was slightly more negative than what economists had been anticipating."

Jackson Hole Significance for Fed Chair [4:12]

• Jackson Hole is a crucial platform for the Fed Chairman to fine-tune his message on inflation and the labor market.
• His previous press conference caused a stir due to a lack of explanation for not hiking rates and no signal of future hikes.
• Jackson Hole offers an opportunity to provide insight into the Fed's reaction function.

  "I think this is massively important platform for Kevin Walsh."

Asian Market Setup and Concerns [5:39]

• Equity markets are relieved with a decent finish for U.S. markets overnight, which is expected to feed into Asia.
• Chipmakers in Asia may see another decent session.
• Concerns about Tencent's overnight plunge could weigh on the Hong Kong market.

  "Well, certainly from the equity market point of view, you can see people are very relieved with a decent finish for U.S. markets overnight."

Long-End Treasury Market Worries [6:13]

• The long end of the Treasury curve is a bigger concern, with a 30-year U.S. Treasury auction scheduled.
• The U.S. budget deficit was significantly worse than expected.
• The 10-year auction required the highest yield since 2007 to clear, indicating poor demand.

  "The bigger concerns really are to do with the long end of the Treasury curve."

Yen Pressure and Intervention Effectiveness [7:35]

• The initial rounds of intervention were effective in knocking dollar-yen down, but it is gradually ticking up.
• Positioning by traders in the yen has been significantly reduced.
• Traders are gradually rebuilding yen positions, heading back towards the 160 level.

  "It looks as though what we saw, the initial rounds of intervention were effective, knocked dollar yen down quite a long way."

Bank of Japan's Role in Yen's Future [8:26]

• The Bank of Japan's actions are far more important for the yen than intervention.
• Three BoJ speakers are due before the September meeting, offering an opportunity to signal a change in direction.
• Back-to-back rate hikes in September and October are likely the minimum required to jolt the market.

  "But really, the far more important thing is what's the Bank of Japan going to do."

U.S.-Japan Policy Friction Potential [9:28]

• There's potential friction between U.S. views on Japanese monetary policy and Japan's domestic agenda.
• Japan's administration prefers easy policy to reflate the economy.
• The U.S. may be using back channels to persuade Japan to change its stance.

  "I'm really interested to see how Washington will view the comprehensive policy here in Japan."

Tencent's AI Spending and Profitability [11:36]

• Tencent doubled its AI and compute spending last quarter, leading to negative cash outflow for the first time since 2021.
• Revenue grew 11% year-on-year, exceeding estimates, driven by gaming and ad sales.
• Bloomberg Intelligence is skeptical that AI investments will translate into earnings this year.

  "China's biggest company more than doubled spending on the AI projects and computing last quarter, reflecting intensifying efforts to catch up with rivals."

Tencent's AI Product Success and Model Lag [12:38]

• Tencent's AI agent, WorkBuddy, has seen rapid success since its March launch.
• The company's foundational AI model, Hi3 (formerly HunYuan), is significantly smaller than rivals' models.
• Tencent aims to launch a state-of-the-art model, Hi4, by the end of the year.

  "So the company says it's aiming to build a state-of-the-art AI model. By the end of this year, the Hi4 will be launched."

Hon Hai's AI Infrastructure Push [14:15]

• Hon Hai's second-quarter profit beat estimates, reflecting a surge in AI infrastructure spending.
• The company is on track to mass-produce NVIDIA's next-generation Vera Rubin platform this quarter.
• Robust demand for consumer electronics is also boosting Hon Hai, a key assembler of Apple iPhones.

  "Honhai's second-quarter profit beat estimates, reflecting the surge in AI infrastructure spending."

Chinese Tech Sector Outlook [15:08]

• Short interest in Chinese internet stocks has dropped, with expectations of better-than-subdued e-commerce results.
• AI breakthroughs are expected to cut internet platforms' costs and improve services.
• Quality and earnings are becoming more important than just the AI story in the Chinese tech space.

  "The retreat from bearish bets underscores expectations that the e-commerce results will beat subdued forecasts while AI breakthroughs cut internet platforms' costs and improve their services."

Iran War Disruptions Deepen Oil Squeeze [17:42]

• The Iran war disruptions are deepening the global oil squeeze, with an expected shortfall of 1.8 million barrels a day this quarter.
• This shortfall is more than double previous forecasts.
• Tehran is signaling a more aggressive military posture, preparing for a longer period of confrontation.

  "The IEA report really citing these Iran war disruptions deepening the global oil squeeze and being responsible for that supply shortfall."

U.S. Strategy Shift on Iran [18:32]

• The Trump administration is shifting to a maximum pressure campaign, focusing on economic sanctions rather than a military campaign.
• This shift is partly due to shortages of U.S. weaponry.
• There are concerns about collateral damage in the region from this strategy.

  "On the U.S. side, almost the exact opposite. If you, you know, have heard Trump say that he wants to, quote, low-key it, really focus more on economic sanctions and other economic pressures rather than a military campaign."

Zhu Rongji's Legacy in China's Economy [21:06]

• Former Chinese Premier Zhu Rongji, a key architect of China's economic rise, has died at 97.
• He was instrumental in state sector reforms and China's entry into the World Trade Organization.
• Zhu's pragmatism and reform-minded approach significantly shaped modern China's economy.

  "He absolutely was the architect of today's modern, more market-focused economy."