Hormuz Deal Elusive; Wall Street Sees Bond-Market Angst | The Asia Trade 8/10/2026

Iran-U.S. Tensions and Strait of Hormuz Negotiations [00:01:06]

• A deal to reopen the Strait of Hormuz between Iran and Oman remains elusive, with Tehran rejecting direct talks with the U.S.
• President Trump indicated that the U.S. can wait for Iran's economic struggles, citing high inflation around 70 percent, to soften its stance.
• Iran insists on the U.S. returning to the memorandum of understanding signed in June before engaging in any talks.

  "He is saying today and he said this in a brief phone call with Axios."

U.S. Economic Data and Fed Policy [00:01:58]

• The U.S. jobs report showed only 35,000-34,000 job growth over the last 12 months, significantly below the Fed's desired trend.
• This weaker-than-expected data keeps the Federal Reserve on watch, potentially influencing future monetary policy decisions.
• Markets reacted positively, with gold rallying on Friday, anticipating the Fed might remain on hold pending CPI data.

  "So it definitely puts an interesting dynamic ahead of the CPI data in midweek."

Iran-Oman Talks on Strait of Hormuz [00:02:45]

• Iran's Foreign Minister stated that progress is being made in talks with Oman to reopen the Strait of Hormuz, but no official readout is available.
• Iran's proposal includes administering the strait and charging tolls, while Oman is reportedly more receptive to U.S. escorts.
• Iran has indicated that U.S. and Israeli-flagged ships would not be permitted through the strait, though such ships are not common.

  "But we haven't really gotten a readout from anyone on that yet either."

Gaza Diplomatic Track and Netanyahu's Rejection [00:03:30]

• Israeli Prime Minister Benjamin Netanyahu has rejected a U.S.-backed peace deal for Gaza, which proposed Hamas disarmament and Israeli withdrawal.
• The deal, part of Trump's "Board of Peace," aimed for peace and a two-state solution but has seen no progress, with Israel continuing to cross into Gaza territory and Hamas not disarming.
• Netanyahu, facing re-election, has publicly dismissed the deal, highlighting a pushback from sovereign nations against Trump's unilateral announcements.

  "Well, none of that has happened so far."

U.S. Treasury and Inflation Concerns [00:04:18]

• The U.S. Treasury appears eager to prevent bond yields from spiking, especially as recurring supply shocks complicate efforts to curb sticky inflation.
• The shelter inflation component, a key focus for the Fed, remains in check.
• The inflation picture is further complicated by uncertainty surrounding energy flows due to the situation in the Strait of Hormuz.

  "The inflation picture obviously further complicated by the fact that we don't have a clear kind of see through as to what happens with with energy flows right with the Strait of Hormuz."

China's Support for AI Champions [00:05:00]

• China is taking a proactive approach to support its AI sector, with many Chinese AI leaders listing on capital markets.
• This strategy signifies a new era for China's tech industry, mirroring its past dominance in solar, wind, and batteries.
• The growth of China's AI models and their global expansion is a significant development that could challenge leading U.S. research labs.

  "So clearly China is taking a positive view that they want the capital markets to support the growth in AI."

South Korea's Market Volatility and SK Hynix [00:06:04]

• South Korea's KOSPI market has experienced historic volatility, with a 40% drawdown from its peak, helping to flush out leverage.
• Despite cheap valuations, foreign investors remain hesitant due to ongoing volatility and competition from Chinese chipmakers.
• SK Hynix is committing $38 billion to memory capacity expansion, with potential share buybacks on watch, which could support the Korean Won.

  "So South Korea has been one of the most, if not the most volatile market in the world."

Apple's Testing of Chinese Memory Chips [00:07:15]

• Apple is reportedly testing memory chips from China's CXMT for use in products sold in China, such as iPhones and iPads.
• The company is seeking White House approval due to CXMT being blacklisted by the Pentagon, restricting technology transfer.
• This move could lead Apple to use off-the-shelf chips and potentially redesign product components.

  "And Apple is looking for the blessing of the White House to do so because of course CXMT has been blacklisted by the Pentagon."

U.S. Critical Minerals Investment and Sunrise Energy Metals [00:08:30]

• President Trump announced a $3 billion investment in critical minerals mining to reduce U.S. reliance on China.
• Sunrise Energy Metals received a $400 million loan to expand its scandium production, aiming to become a primary supplier.
• The U.S. is also fast-tracking the Resolution copper mine in Arizona, intended to satisfy a quarter of U.S. copper demand.

  "So this is where Scandium oxide is mined."

Pentagon Urges Defense Firms to Speed Up Production [00:09:35]

• The Pentagon is pressing major defense contractors to accelerate production of key weapons and missile defense systems.
• Companies are asked to submit plans for faster deliveries and increased production capacity by late August.
• Concerns about U.S. weapons stockpiles have risen following operations against Iran, though President Trump denies the U.S. is running low on munitions.

  "Deputy Defense Secretary Steve Feinberg asked companies to submit plans by late August for faster deliveries and increased production capacity."

U.S. Tariffs on Solar Panel Components [00:10:05]

• The Trump administration has imposed new tariffs and price floors on polysilicon and other solar panel components.
• Imported polysilicon derivatives, including silicon wafers, will face a 15% tariff starting in December.
• This measure aims to prevent Chinese-linked manufacturers from circumventing U.S. trade restrictions by shifting production.

  "Under the move, imported polysilicon derivatives, including silicon wafers, will be subject to 15% tariffs starting in December."

U.S. Senate Passes Short-Term Spending Bill [00:10:30]

• The U.S. Senate approved a short-term spending bill to avert a government shutdown.
• The bill, which funds the government through December 11th, sidesteps President Trump's demands for Iran war funding and new voter ID measures.
• The legislation now moves to the House of Representatives for consideration.

  "The bill would keep the government funded through December 11th and now heads to the House, where lawmakers are expected to take it up later this month."

U.S. Jobs Report Impact on Fed Expectations [00:11:10]

• The softer-than-expected U.S. jobs report has reset expectations for a Federal Reserve rate cut in September, with odds falling to around 40% from 60%.
• The report highlighted underlying weakness in the labor market, particularly concerning participation rates and wage growth.
• This data reinforces focus on upcoming inflation readings, which will be crucial for assessing the Fed's next moves.

  "Payrolls, the latest numbers coming from the US showing how it was softer than expected."

Yen Weakness and Intervention Efforts [00:12:05]

• Hedge funds have halved their speculative bets against the Japanese yen following intervention efforts, challenging short positions.
• The Bank of Japan (BOJ) is being watched for follow-through, with one board member suggesting faster rate hike considerations.
• The sustainability of the yen's strength depends on continued BOJ action and potential U.S. Treasury actions regarding fundraising.

  "So the latest CFTC data shows that hedge funds and other speculators have halved some of their speculative bets on the end."

U.S. Treasury Fundraising and Yield Curve [00:13:00]

• The U.S. Treasury may shift fundraising towards the short end of the curve to alleviate pressure on the long end, particularly the 30-year yield.
• Upcoming 10-year and 30-year Treasury auctions will provide insight into market expectations for the Treasury's fundraising strategy.
• The yield curve's steepness is a political concern, with efforts to manage mortgage rates.

  "So what will be very interesting in the back end of this week is we have 10-year and 30-year Treasury auctions."

China's AI Ambitions and Domestic Chip Market [00:14:00]

• Chinese firms plan to spend nearly half their AI accelerator budget on locally made chips, up from 30% in June.
• Locally manufactured chips are expected to constitute 70% of China's chip usage by the end of the decade.
• Companies like Cambricon and Meta X are reporting significant revenue growth, driven by government support for domestic chip ecosystems.

  "And according to Bloomberg Intelligence, which did a survey survey with Chinese tech executives, they found that Chinese firms are planning to spend close to half of their AI accelerator budget on locally made chips."

DeepX's Low-Power AI Chips for Physical Devices [00:15:00]

• South Korean AI chip designer DeepX is developing low-power generative AI chips for battery-powered devices like robots and drones.
• The company aims to provide cost-competitive AI capabilities for physical AI systems, enabling on-device processing without data center fees.
• DeepX sees strong market demand for AI transformation in robotics, smart factories, and other industries, positioning itself as a leader in low-power AI chips.

  "So our customers require low power consumption, you know, AI capability for generative AI."

Market Concentration and Investor Behavior [00:16:00]

• J.P. Morgan Asset Management strategist David Kelly describes the market as "bipolar," with investors either taking extreme risks (e.g., Bitcoin, meme stocks) or hoarding cash due to fear amplified by social media.
• Kelly advises against trying to "beat the market" and instead encourages investing in the broader market and avoiding poorly managed companies.
• He suggests that education and default investment options like 401(k)s can help younger investors become more engaged in traditional investing.

  "People really need to understand that it's, you know, Wall Street is not, you know, I guess even if you look at all these terms, you see all these numbers, all this confusion, it's not that difficult."