TL;DR

China prepares for Taiwan action; Japan bond yields spike; EU launches €150B defense fund.

Highlights

• Xi Jinping directs China's military to prepare for a Taiwan attack by 2027; U.S. reaffirms deterrence commitments1.
• Putin seeks Ukraine peace deal tied to permanent NATO expansion halt and partial sanctions relief; no Western response yet2.
• Houthi missile attacks on Israel continue despite $1B+ U.S.-Israeli strikes on Yemeni infrastructure; Red Sea shipping remains at risk3.
• Japan’s 40-year JGB auction yield hits record 3.135% amid weak demand; MOF considers issuance cuts, insurers report record losses5.
• Shanghai Futures Exchange proposes opening to overseas investors; HKEX launches RMB platform as U.S. investment curbs on China persist6.
• EU approves €150B SAFE defense fund for joint procurement; UK eligible, Hungary abstains7.
• Australia extends Woodside’s North West Shelf LNG to 2070, raising emissions and royalty-free gas concerns8.
• China steel rebar prices fall to lowest since 2017 on oversupply; iron ore and rebar futures decline10.
• Shein to file Hong Kong IPO prospectus after London stalls; targets $50B valuation amid regulatory hurdles11.
• RBNZ cuts rates for sixth time to 3.25% as NZD rises; signals deeper easing on global trade risks18.
• Circle files for NYSE IPO at $5B valuation; SEC opens review of WisdomTree’s spot XRP ETF1617.
• BAT sells 2.3% stake in ITC for $1.36B; ITC shares drop over 4% on block deal15.

Commentary

Geopolitical risk remains elevated, with China signaling increased military readiness on Taiwan1 and Russia linking a Ukraine peace deal to a halt in NATO expansion2. Both developments sustain global defense spending and keep Asia-Pacific and European security risk premiums in focus. The EU’s €150B SAFE defense fund, now effective, is set to channel capital into European defense and related equities, with expanded eligibility to the UK and Ukraine7.

Japanese fixed income markets saw a record 40-year JGB yield and weak auction demand, prompting the MOF to consider issuance cuts. Major life insurers reported substantial unrealized losses, raising the risk of capital repatriation and potential volatility in yen crosses5. The Bank of Japan’s and MOF’s upcoming reviews on bond supply will be closely watched for further signals on global capital flows.

In commodities, Australia’s long-term LNG extension and Turkey’s Black Sea gas expansion both add to global gas supply, though Australia’s move faces criticism over emissions and royalty-free exports8. Meanwhile, Chinese steel rebar and iron ore prices continue to slide, reflecting persistent construction sector weakness and oversupply10. The Shanghai Futures Exchange’s draft plans for greater foreign access come as the HKEX launches an RMB platform, both aiming to internationalize Chinese markets amid ongoing U.S. investment restrictions6.

Equity and corporate activity is active: Shein’s Hong Kong IPO filing underscores the impact of Chinese regulatory clearance and shifting global capital access11, while BAT ’s ITC stake sale reflects portfolio rebalancing and market reaction in Indian equities15. In crypto, Circle’s NYSE IPO filing and the SEC’s review of a spot XRP ETF highlight ongoing institutionalization and regulatory engagement in digital assets1617. The RBNZ’s sixth consecutive rate cut, with a rising NZD , reflects global trade headwinds and a cautious policy stance18.

Traders should monitor further developments in Taiwan and Ukraine, Japanese bond market signals, and regulatory shifts impacting capital flows between East and West. Volatility remains likely across defense, energy, tech, and currency markets, with crypto and commodities also sensitive to evolving macro and policy dynamics.