JPM JPM International Ma

• Strong set of markets overnight with Broadening + AI/Tech Strength. Asia seems back to firmly trade more US T+1. Oil rebounding following extended selloff while Iran denied talks with US though confirmed negotiations with Oman on SoH continuing.

• Our view is that the AI/MOMO factor correction is over but on the way up, the surprise could be higher thematic dispersion. This involves pockets of Software (on commoditization of LLMs) + Hyperscalers after they dramatically improved the narrative around CAPEX and ROI. • For those tracking AI demand/adoption, JPM APAC AI Implementation survey (>300 responses) suggests that AI investment is already mainstream and average AI spend as % of expenses plus capex will continue to grow in the next 12 months.

• Scepticism on whether JPY strength will last is already emerging. Past interventions did not last and despite the massive scale of this intervention—c. $100bn on Thurs and Friday alone —USDJPY is up this am. • Unless the underlying macro environment changes materially, consensus is that JPY selling resumes. Long-end JGB yields don’t truly reflect Japan's fiscal position (i.e. are too low vs other DM markets) and policy rates are 50bp-100bp too low. Meanwhile, the MoF resources are finite and Takaichi's aggressive pursuit of growth through fiscal policy is ultimately inflationary. • Of note, JPM Strategists kept targets unchanged: 3Q26 160, 4Q26 164, 2Q27 164

• Near term, the big picture remains supportive — Global Mfg PMI still expansionary (52.7 in July) + US nowcaster for US 3Q GDP spiked to 6.2%; Q2 earnings tracking strong; and Schlegel’s TPM triggered a buy signal about a week ago. The risk to hedge now is likely Fed credibility / long-end rates volatility. History says the next 10–20bp higher in 10Y USTs could pressure Equity indices, especially if DXY is lower too.

• A lot of Research out on China. From JPM: a) a deep dive into the RMB’s expanding role in commodity markets and explore its implications for RMB internationalization; and b) discussion of China growth gaps and how 2H growth depends on faster fiscal deployment after 1H under- execution. The CFR says that RMB is undervalued btw 30–35%