Samsung and SK Hynix expected to announce massive investments in HBM and DRAM to meet strong AI-driven demand. Micron's strong earnings and long-term contracts suggest even in a downturn, memory makers can achieve sufficient profit. Capacity expansion is urgent to avoid shortages in 2028.

US services inflation remains strong due to lack of capital investment (AI-focused). Fed likely on hold, not hiking, as weak real wages constrain households. Asia faces K-shaped growth: tech sectors strong, but rest of economy weak, with stagflation risk in non-tech countries like India and Philippines.

Expect Tankan sentiment to decline due to Middle East conflict pushing up commodity prices and scrambling supply chains. Weak yen is a double-edged sword: benefits exporters but hurts SMEs and households. BOJ still wants to hike but will move gradually; next hike expected in December.

US and Iran agreed to halt tit-for-tat attacks and resume talks in Doha, Qatar, focusing on restoring safe transit through the Strait of Hormuz. Iran seeks leverage via tolls; US and allies reject any tolls. Frozen Iranian assets and Hezbollah remain contentious issues.

Oil volatility compressed as US and Iran return to talks; US inflation expectations drifting. Major rotation out of US chipmakers into software, mirrored in Asia. Korean policy announcements on semiconductors will be key for the tech trade.

Decades of layered US sanctions on Iran (statutory and executive) cannot be undone quickly. Trump can waive sanctions for 60 days, but full lifting requires Congressional action. Banks are reluctant to facilitate Iranian oil payments in USD due to legal uncertainty.

Asia is vulnerable to the rotation trade due to concentration in memory chipmakers (Samsung, SK Hynix, TSMC). A souring of sentiment could spill over to non-AI exposed markets like Australia and Malaysia. Central bankers are not declaring victory on inflation despite falling oil prices.

Risk for EM bonds has shifted from oil prices to Fed policy. Sensitivity of EM yields to Treasury yields has increased. A hawkish signal from Kevin Warsh could weigh on EM local currency bonds. However, some argue a Fed hike due to robust growth could be positive for EM, and prior EM rate hikes provide defense.