JPM International Market Intelligence | Morning Briefing: 20 SECONDS

20 SECONDS: Debasification. It’s August. JPM Research on Humanoids & updated BOJ call.

• Broad risk-off tape in Asia led by a renewed unwind in AI.

• The Iran situation is “status quo” so odds that SoH normalizes by year-end keep drifting lower (36% vs 50% at the start of August). Military realities (now debasification being discussed)+ declining Oil Inventories (& China now adding to Oil reserves) point at declining US appetite for serious escalation but Iran’s near-term incentives could be different.

• The week to date newsflow was not particularly consequential & our flows suggest degrossing is close to a turning point. Hence, I am tempted to explain the fairly steep drop in AI with “It’s August”.

• Within Tech, people pointed at PA data center restrictions, the FN fallout on Optics and some disappointment with the Anthropic ARR number of >$65B. However, you wouldn’t say that by looking at pre-IPO tokenized prices. Meanwhile, CODEX user growth was quite solid (Chart below)

• The flurry of articles highlighting global fiscal dynamics; supply pressures from the AI boom; Fed uncertainty and lingering inflation pressures from geopol/AI made all valid (but mostly not new) points. Stocks should care about rates (Equity/Bond Yield Beta is negative & there is little valuation cushion in the EY vs BY framework) but the relative calm across global rates markets stood out (perhaps because shorts are now so extended).

• Spotlight on China robotics/physical AI sector after Unitree opened up more than 600% in its STAR market debut. The index was down more than 6% as the IPO fuelled a liquidity siphon into the new listing. JPM Analysts discuss physical AI’s public debut by looking at sector rotation, policy support, and the new valuation anchors. BBG explains why you should be excited about this theme.

• Finally, JPM Econ team brings BoJ rate hike call forward from Oct to Sep given increased risks of market volatility. They also see another hike in Dec and, assuming no major shift in fiscal policy, they forecast 3 further hikes in CY27, taking the policy rate to 2.25%.