美财政部拟加倍回购长债，特朗普宣布对伊行动，亚洲市场关注

PAUL: THIS IS THE ASIA TRADE. ASIAN STOCKS SET TO FOLLOW WALL STREET HIGHER AFTER THE U.S. MOVES TO LOWER BORROWING COSTS WITH EXPENDED BUYBACKS OF LONGER DATED BONDS. SK HYNIX REVEALS PLANS TO BUY BACK $29 BILLION OF SHARES AS A MOVES TO STABILIZE ITS STOCK PRICE. ALIBABA'S CLOUD BUSINESS IS SET TO TAKE THE SPOTLIGHT WHEN IT REPORTS EARNINGS LATER AS INVESTORS PROPEL IT TO THE TOP PERFORMANCE IN CHINESE TECH. AND MUCH MORE ON EARNINGS COMING UP AS WE HEAR FROM HONG KONG EXCHANGE SEE YOU AND EXECUTIVES FROM AI.

LET'S GET SET WITH A CHECK OF ASSETS. WE DO ANTICIPATE SOME GAINS FOR EQUITIES. WE DID SEE SOME MODEST GAINS FOR U.S. STOCKS AS WELL. NOT A HUGE BOUNCE ON THE BIG NEWS THAT IT WILL AT LEAST DOUBLE THE BOND BUYBACK FOR 10 AND 30 YEAR NOTES. THAT PUTS SOME SUPPORT UNDER BOND PRICES. 5.19%. ABOUT A 10 BASIS POINT MOVE. NOTWITHSTANDING, U.S. DEBT DID TICK OVER TO $40 TRILLION. WE JUST HEARD FROM PRESIDENT TRUMP THAT HE'S ANNOUNCING A CRUSHING IRAN OPERATION.

BRENT CRUDE NOT REALLY MOVING AT THE MOMENT. AXIOS HAS BEEN REPORTING THAT THE U.S. HAS BEEN SECRETLY SHIPPING ABOUT 10 MILLION BARRELS A DAY THROUGH THE STRAIT OF HORMUZ, ABOUT HALF THE PREWAR VOLUME. WE WILL BRING YOU MORE ON THAT STORY LATER ON. THE GOLD PRICE STILL GETTING SOME SUPPORT UNDER THE CIRCUMSTANCES. HUNDRED $4500 AN OUNCE. SYDNEY FUTURES UP ONE THIRD OF A PERCENT. WE WILL BE TALKING TO THE EVOLUTION CEO LATER ON, BUT NORTHERN STAR, THE COUNTRY'S BIGGEST GOLD MINER JUST REPORTED EARNINGS OF A NET INCOME OF .66 BILLION.

FIRST, LET'S GET SOME MORE ON HOW MARKETS ARE REACTING TO THE U.S. TREASURY BUYBACKS. LET'S GET TO OUR TEAM. BLOOMBERG SHORT-TERM INTEREST RATES REPORTER ALEX HARRIS IS WITH US FROM NEW YORK. IN SINGAPORE, MARK CRANFIELD FOR THE MARKET REACTION. ALEX, WE HAVE THIS NEWS THAT DID SEE YIELDS BACKPEDAL A LITTLE BIT, A BUYBACK OF 10 AND 30 YEAR NOTES, POTENTIALLY DOUBLING. THE QUESTION IS WHERE IS THIS MONEY COMING FROM? IS THIS A CASE OF TREATING THE SYMPTOMS AND IGNORING THE DISEASE?

ALEX: HI. YEAH, I THINK YOU HAVE IT RIGHT IN TERMS OF TREATING THE SYMPTOMS AND IGNORING THE DISEASE. WHEN I TALK TO SOMEONE THIS MORNING, THEY SAID WHAT BESSENT IS DOING IS PICKING A FIGHT WITH THE TWO BIGGEST MARKETS WHICH YOU DON'T WANT TO BE PICKING FIGHTS WITH. FIRST, THE FX MARKET AND NOW THE TREASURY'S MARKET. THE THING IS, NOW, THE MARKET UNDERSTANDS THE GAME YOU ARE PLAYING HERE. ANYTIME YOU COME IN AND DO THESE BUYBACKS, THE PREMIUM AND WHAT THEY WILL BE DEMANDING IS GOING TO BE MUCH HIGHER AND THEY WILL REALLY PUSH THE MARKET AND TEST IT.

THE OTHER THING TO KEEP IN MIND IS JUST TWO WEEKS AGO, THE TREASURY RELEASED THE RESULTS OF ITS REFUNDING AND IT DID NOT DISCUSS BUYBACKS. IT WAS KEEPING EVERYTHING UNCHANGED. EVERYTHING WAS LOOKING VERY, VERY STEADY. SO THERE WAS NO DISCUSSION FROM THE TREASURY BORROWING ADVISORY COMMITTEE. MARKET PARTICIPANTS THAT GUIDE AND ADVISE THE TREASURY, THERE IS NO INDICATION THIS WAS EVEN ON THE TABLE. THAT IS WHERE PEOPLE WERE A LITTLE FRUSTRATED WITH THE TREASURY DEPARTMENT TODAY.

AND A LITTLE CONFUSED. THE OTHER THING IS CHANGES -- IT CHANGES THE NATURE OF HOW THE TREASURY DEPARTMENT IS USING BUYBACKS BECAUSE THE WHOLE RATIONALE FOR THEM IN THE FIRST PLACE WAS VERY MUCH A MARKET FUNCTIONING TOOL. IF THERE WAS SOME IMPAIRMENT IN TREASURY MARKETS OR THE MARKETS WERE NOT WORKING AS THEY SHOULD, THAT WAS WHAT THEY WERE -- THE BUYBACKS WERE TRYING TO SOLVE. WE DON'T HAVE A MARKET FUNCTIONING ISSUE HERE.

THE MARKET KNOWS THIS IS HOW THEY ARE CHANGING THE GAME SO IT WILL CHANGE THE RULES AND REALLY PUNISH THE TREASURY DEPARTMENT TO SOME EXTENT HERE. PAUL: MARK, WE DID SEE SOME PRETTY BIG MOVES OFF THE BACK OF THAT ANNOUNCEMENT, NOT THE LEAST OF WHICH WAS THE DOLLAR. WE'VE GOT PRETTY MUCH EVERY MAJOR CURRENCY GAINING GROUND ON THE DOLLAR. HOW ENDURING WILL THESE MOVES BE? MARK: YOU WILL FIND THAT REACTION FUNCTION IN THE U.S.

DOLLAR STILL HAS QUITE A WAY TO GO. INVESTORS ARE LOOKING FOR WHO IS THE WEAK LINK IN ALL OF THIS? AS ALEX WAS SAYING, THE TREASURY BUYBACKS MAY HELP TO REDUCE YIELDS TO SOME EXTENT AT THE LONG END OF THE CURVE BUT THE U.S. TREASURY IS PUSHING MORE OF ITS FUNDING TOWARDS THE SHORT END. A LOT MORE PRESSURE ON TREASURY BILLS THERE. WE HAVE THE ANNOUNCEMENT THAT THE PUBLIC DEBT HAS REACHED $40 TRILLION IN THE U.S.. THERE HAS BEEN NO INDICATION YET OF WHEN THE U.S.

GOVERNMENT WILL START TO REIN IN THAT FISCAL DEFICIT. INVESTORS CAN SEE CLEARLY YOU ARE TRYING TO PLAY GAMES WITH THE TREASURY MARKET, YOU ARE NOT BRINGING IN THE FISCAL DEFICIT. YOU NEED A WEAK LINK AND THAT IS THE U.S. DOLLAR. THE MOVES WE ARE SEEING YESTERDAY ARE PROBABLY THE BEGINNING OF A GREATER SHIFT. AROUND THE WORLD, CENTRAL BANKS ARE GENERALLY SKEWED TOWARDS RAISING INTEREST RATES. THIS MAY MEAN THE FEDERAL RESERVE WILL HOLD BACK ITSELF, BUT IT MIGHT NOT RAISE INTEREST RATES.

IN EUROPE, SOUTH KOREA, POSSIBLY AUSTRALIA, JAPAN, OTHER PARTS OF THE WORLD, THEY ARE CLEARLY MOVING IN THAT DIRECTION WHICH IS POSITIVE FOR THEIR CURRENCIES. IT IS ALL FEEDING INTO THE PLACE, WHO'S THE PERSON THAT WILL MOVE THE MOST, WHERE CAN INVESTORS GET THE BIGGEST BANG FOR THE BUCK? SHORTING THE U.S. DOLLAR LOOKS LIKE A TRADE THAT WILL HAVE LEGS. YESTERDAY, CHINESE AUTHORITIES, THE CENTRAL BANK THERE CAPPED THE DOLLAR-YUAN RATE.

A SIGNAL THEY DON'T WANT A WEAKER CURRENCY. THE FLIPSIDE FOR ASIA IS IT WILL HELP TO HAVE STRONGER CURRENCIES IN ASIA. ASIAN CURRENCIES ARE IMPROVING. THE EURO HAD A STRONG DAY YESTERDAY. IT SEEMS TO BE GAINING GROUND AS WELL. CANADIAN DOLLARS IMPROVING ON THE TARIFF DEAL WITH THE UNITED STATES. EVERYWHERE OUTSIDE OF THE U.S. DOLLAR, THINGS ARE GOING IN THEIR FAVOR. NOW YOU HAVE THIS SITUATION WITH THE TREASURY AND THE BUYBACKS AS WELL.

IT IS ALL POTENTIALLY MAKING THE U.S. DOLLAR A WEAKER PRODUCT. PAUL: HOW ABOUT THE IMPACT ON EQUITY MARKETS AS WELL? WE SAW SOME PRETTY MODEST GAINS IN THE U.S.. WHAT KIND OF PASS-THROUGH CAN WE EXPECT TO SEE IN ASIA TODAY? MARK: A LOT OF PEOPLE WILL BE FOCUSED ON THIS SK HYNIX DEAL THAT THEY WILL DO THEIR BUYBACKS BUT THEY WILL BE VERY CURIOUS ABOUT WHAT HAPPENS THERE. SK HYNIX HAD BEEN TELLING PEOPLE THE ADR'S IN THE U.S., THEY RAISED AROUND $26 MILLION EQUIVALENT.

THAT WAS TO HELP WITH THEIR CAPITAL EXPENDITURE. NOW, THEY ARE USING THAT MONEY TO BUY BACK DOMESTIC STOCK. WHAT IS THE STORY HERE? PEOPLE WILL BE CONFUSED ABOUT THE INTENTIONS OF ONE OF KOREA'S MOST IMPORTANT COMPANIES, PARTICULARLY AFTER THE VOLATILITY. YOU MAY HAVE SEEN INITIAL GAINS IN THE KOREAN STOCKS, BUT WHETHER THERE'S ANY FOLLOW-THROUGH, THEY NEED TO EXPLAIN CAREFULLY. SAMSUNG IS RAISING PRICES ON SOME OF ITS PRODUCTS WHICH WILL CERTAINLY BOOST THE MARKET AS WELL.

YOU HAVE A FAIRLY FLUID SITUATION WHERE INVESTORS WILL NEED A LOT MORE CONVINCING THAT THERE'S TRACTION IN THESE MOVES FOR ASIAN EQUITIES IN PARTICULAR. THE FACT THAT CURRENCIES ARE GOING TO START TO DO BETTER, THAT IS DEFINITELY A GOOD SIGN FOR ASIA. PEOPLE MIGHT START TO MOVE TO THE MARKETS WHERE THERE HAS BEEN A BIG OF A LAG. THEY WILL MOVE BEYOND KOREA AND TAIWAN, PROBABLY LOOKING AT JAPAN, HONG KONG, CHINA. IT IS THE UNDERDOGS THAT MAY COME THROUGH IN ASIA NOW.

PAUL: ALEX, BESIDES THE BUYBACKS THAT WE HEARD FROM THE U.S. TREASURY, WE GOT THE FED MINUTES TODAY. TWO DISSENTS IN TERMS OF TIGHTENING BY 25 BASIS POINTS. OF COURSE, THE FED CANNOT DO ANYTHING ABOUT BALLOONING U.S. DEBT AND DEFICITS. IT HAS ONLY A COUPLE LEVERS IT CAN PULL. WHAT ARE MARKETS GOING TO WANT TO HEAR, PARTICULARLY THE BOND MARKET AROUND THE OUTLOOK FOR INFLATION AND WHAT THE FED MIGHT DO ABOUT IT? THIS JACKSON HOLE SPEECH IS SHIPPING UP TO BE A PRETTY IMPORTANT ONE FROM KEVIN WARSH.

ALEX: YEAH, I THINK KEVIN WARSH NEEDS TO SHOW A BIT OF CONTRITION HERE. I THINK HE ALSO NEEDS TO GIVE THE MARKET SOME SORT OF SIGN AS TO HOW FAR IS THE FED -- HOW FAR ARE MARKETS WILLING TO GO -- HOW FAR IS THE FED WILLING TO LET MARKETS RUN HERE BEFORE THEY START TO GET CONCERNED THAT HAS GONE TOO FAR AND IT HAS DONE TOO MUCH