伊朗局势推高油价，美债收益率上行致亚洲股市下跌

Bloomberg Audio Studios podcasts radio news. Welcome to the Daybreak Asia podcast. I'm Doug Krer. Crude oil prices are higher at this hour after Iran said early in the day on Wednesday it has no intention of backing down from war with the US. An official from the Islamic Republic said counter strikes will escalate if the US continues attacking its territory and infrastructure. The official also said Iran's leaders see the war as an existential threat that leaves them little choice but to keep fighting.

Now, President Trump said the war will end after the midterm elections in the US. Now, the resurgence in oil prices sent Treasury yields higher in New York trading, more so at the long end of the curve. We had the 10-year rising about five basis points to 4.84%. We're holding at that levels now in the Tokyo session. Now, some of this move also reflected the market's disappointment with the size of the Treasury's next bond buyback up to $6 billion of longdated government debt will be purchased.

Now, many in the market had been looking for an increase of between 7 to 10 billion. For a closer look, let's bring in Bloomberg's Leanting 2. Leon Ting is managing editor for Asia Equities and she joins from our studios in Singapore. Thank you for being here. I'm curious to get your take on how Bessant is trying to get the long end of the curve to lower levels.

Yeah, I think uh this really means that the market is really doubting what he could actually do to um suppress the long end of the yield uh curve. um just because unlike central banks which typically have unlimited firepower, Besson's treasury department doesn't have that. Um so his words uh cannot easily be backed up by actions. Um so I think I know he obviously wanted to have that kind of um power and influence in the market with whatever he says. uh but today's market reaction is a reflection that uh yeah market is not believing in what he says and uh they are trying to players are trying to bet against uh his intention.

So would you say that the risk is that we could see yields push higher still in this environment?

Yeah, there are lots of factors that he really cannot control. Um so the yields are having um yeah uh a lot of uh there are a lot of reasons for the upward move in the US Treasury yields. uh obviously persistent inflation derived derived from higher oil prices again that's derived from you know the hormous war which which is ongoing and there's uh signs of intensifying and there is also of course concerns about a huge budget deficit uh in the US um and also many other global um uh econom advanced economies are facing similar issue uh and of course the Fed rate hike is is also looming So all these things are uh going to continue to add pressure for the US Treasury yields to go higher.

So Bessant this week wasn't just influencing the bond market. He was trying to influence some of the behavior of traders in the foreign exchange. Those folks that have been essentially testing Bessant's resolve to strengthen the yen. He said this week, I think it was late Tuesday US time, that when he himself wades into markets these days, he's effectively doing so with inside information. Is the situation that his impact on the yen, is that as temporary, do you think, as his ability to bring long-term yields down?

Yeah, I think uh overall it's uh it's very similar, right? um he he's saying these um uh commentary including you know asymmetry asymmetry information on the yen on the oil market on the US treasury yields um but I think uh again the whole thing is about whether he can back it up with firepower and uh right now I think yen is an exception which is actually moving in the direction he had wanted uh but if you look at US treasury yields and oil they are actually moving away from um yeah from his intentions.

So I would say uh the yen obviously uh we have the BOJ at play as well and we don't really know how much influence and and inside information he has regarding uh what WA is going to do next but I think overall people are believing that the BOJ is going to uh have to turn more hawkish from now now on. What about this notion that Japan was likely a seller of US treasuries to fund the support of the yen recently during that intervention that Tokyo and Washington embarked on?

Do you think that's going to be problematic for the Trump administration to to know that Japan maybe was a seller of US treasuries?

Yeah, definitely a headache, right? That's if that's real and Japan's definitely more likely to sell more than $6 billion or whichever uh number that Bassan wants to buy back the US treasuries. Um yeah, I mean I think it's um the intention from Basan to really uh help the yuan the yen strength is out of consideration that um this could possibly um reduce the possibility uh from Japan to have to uh sell US treasuries uh to boost the yen.

So all of that basically is pointing to how Asant wants to have lower borrowing costs for his administration. Um so we'll really have to see whether Japan is actually selling the US treasuries or with the recent yen strength uh that trend can be reversed. So you were talking about the fact that a lot of the strength that we are seeing in the Japanese yen is a reflection of expectations that the BOJ indeed will hike rates next week.

I'm wondering about what happens after that and what will be telegraphed to the market and whether or not there is the possibility that we could see maybe successive hikes happening at a more accelerated rate or at least within a time frame that seems more compressed. Yeah, I think that is something that market participants are pricing in right now. Um that's why you see a huge jump in the yen in recent days. Uh part of the reason is also I would say liquidity has been relatively thin uh because of the recent US holiday um and so on and so forth.

Um so yeah I mean I think uh the other factor at play is um Japan's corporate uh profit uh uh possibly be hit by a stronger yen but that side of things uh we've just done some analysis actually uh the corporate balance sheets are actually very strong they've got really good earnings so that can really cushion uh the negative impact from a stronger yen. So if you look at uh uh Nomura research re uh latest analysis a oneyen uh uh strength against the US dollar would mean that companies probably trip uh trim earnings by 0.2 to 0.3 percentage points.

So that's actually very small and the corporate earnings sensitivity to the yen right now has plunged by about twothirds versus about a decade ago. So that also means um a stronger yen actually matters less to Japan Inc.'s profitability these days. Uh so in a way that kind of translates to you know the relatively uh well or resilient uh equity markets in Japan right now. I'm wondering too whether or not some of what Japan is exporting these days as it relates to the AI trade, anything connected to the semiconductor industry is maybe less price sensitive because the demand is so strong.

I think that customers may be willing to overlook any higher price as a result of what's going on with the currency and pass that cost on to the ultimate uh the consumer of whatever uh these manufacturers are are dealing with.

Yeah, that that's that's that's correct. That's really the point. And Japanese uh AI supply chain companies have a lot of pricing power these days. Um so as long as they can you know um keep hiking rates and uh and be receptive um uh for their end users I think that means uh all these AI companies actually have can keep their profit margins high and uh and the higher or stronger yen wouldn't really impact their bottom line all that much.

One sector though that is still seeing uh more of a negative impact is automakers because that sector has a lot of domestic uh manufacturing facility in Japan. Um but on the positive side the auto sector right now only accounts for about 6% of Japanese stock market versus uh more than dou