TL;DR

China-EU financial sanctions escalate; global bond yields surge; IEA warns of record 2026 oil surplus.

Highlights

• China bans transactions with two Lithuanian banks in response to EU sanctions on Chinese lenders, escalating EU-China financial tensions 1.
• China orders Bytedance, Alibaba , and Tencent to halt Nvidia AI chip purchases; U.S. embeds trackers in AI chip shipments to enforce export controls 23.
• Global bond yields surge: U.S. 10Y nears 4.3%, German 30Y at 2011 highs, Japan’s 5Y bond auction sees weakest demand since 2020 as yen slides 68.
• IEA projects record oil surplus by 2026, pushing Brent toward $66; U.S. EIA sees Brent below $60 in Q4 despite Russia’s phased output cuts 54.
• Russia warns of “painful response” if EU uses frozen assets for Ukraine; Ukraine strikes Russian drone hub in Tatarstan 1413.
• Trump–Putin summit set for Aug. 15 in Anchorage; Putin and Kim Jong Un reaffirm military ties ahead of meeting 1211.
• France, Germany, and UK threaten UN sanctions snapback on Iran by end-August, increasing Middle East risk 9.
• Israel masses forces at Gaza border, indicating possible new ground offensive; U.S. urges increased humanitarian aid 10.
• Tencent beats Q2 estimates with 15% revenue growth; shares hit four-year high, boosting Hang Seng Tech Index 16.
• Ether ETFs see record $1B single-day inflow as token nears all-time high; Norway’s oil fund nearly triples Bitcoin exposure 1819.
• China merges top shipbuilders in $16B deal, now controlling 55% of global tonnage, highlighting U.S.-China industrial gap 17.
• Bank of Thailand cuts policy rate to 1.50% to support growth amid weak tourism and exports 7.

Commentary

Rising geopolitical and regulatory tensions continue to shape cross-asset market dynamics. China’s ban on Lithuanian banks and the EU’s sanctions on Chinese lenders highlight growing financial fragmentation between major economies, with potential implications for euro and yuan volatility and cross-border capital flows 1. The escalation in tech trade restrictions—China halting Nvidia chip purchases and the U.S. embedding trackers in AI chip exports—signals further headwinds for global semiconductor supply chains and related equities 23.

Fixed income markets are under pressure as global bond yields climb to multi-year highs, reflecting expectations for prolonged higher policy rates and fiscal concerns 6. The weak demand at Japan’s bond auction and continued yen depreciation underscore investor uncertainty around BOJ policy 8, while the Bank of Thailand’s rate cut points to diverging monetary stances in Asia 7. These moves are likely to drive continued volatility in both developed and emerging market debt.

Commodity markets face renewed downside risk. The IEA’s projection of a record oil surplus by 2026 and recent builds in U.S. crude inventories have pushed Brent and WTI lower, despite Russia’s phased output cuts 54. This could ease inflationary pressures but may weigh on energy equities and producer currencies. Meanwhile, the Ukraine conflict continues to escalate, with Kyiv’s drone strikes deepening cross-border risks and Russia warning of retaliation if the EU repurposes frozen assets 1314.

Equities in Asia found support from Tencent ’s strong earnings, which lifted tech sentiment in Hong Kong 16. In digital assets, institutional demand remains robust: Ether ETFs saw record inflows 18 and Norway’s sovereign wealth fund significantly increased its Bitcoin -linked exposure 19, signaling further mainstream adoption.

Traders should monitor the Trump–Putin summit 12, the Iran sanctions deadline 9, and ongoing South China Sea tensions for potential market-moving developments, particularly in energy, defense, and shipping sectors. Cross-asset volatility remains elevated as policy, geopolitical, and regulatory risks converge.