ASX 200 Live Today - Wednesday, 2nd September

Welcome to our live ASX coverage for Wednesday, September 2. Expect a high volume of posts pre-market and more periodic updates throughout the day. We'll be wrapping the blog up around 2:00 pm AEST. Let us know how we can make it even better.

Japan's 10-year yield hits 3% for the first time since 1996

[8:45 am] The milestone caps a doubling in Japanese benchmark borrowing costs over the past year and comes as the yen sits above 160 per dollar, with a Bank of Japan hike now near fully priced

• 10-year JGB yield up 6 bps to 3%, the highest since 1996 and roughly double where it sat this time last year

• Swaps imply about a 92% chance of a BOJ move by September, with an October increase more than fully priced and the benchmark rate currently at 1%, one strategist flagging the terminal rate repricing from 1.5% to 1.75% or higher

• Tuesday's 10-year auction cleared with a bid-to-cover of 3.29 versus 2.56 last time and a 12-month average of 3.26, though a 30-year sale on Thursday looms as the harder test given fiscal concerns at the super-long end

• Yen at 160.1 per dollar, a third straight session above the level traders watch for intervention, after Japan spent a record US$96.4bn over the past month supporting the currency

• Bessent pressed Tokyo on rate hikes and fiscal sustainability in meetings with Finance Minister Katayama and BOJ Governor Ueda, saying he believes Japan will act in ways that lead to a stronger yen

• Debt-servicing costs are set at a record ¥36.6trn (US$230bn) in the Finance Ministry's initial budget request for next year, with Takaichi yet to explain how a consumption tax cut on food will be funded

US strikes Iran again as Brent pushes above US$95

[8:41 am] The US and Iran traded a second round of attacks in as many days, sending oil to its highest since late July and putting the Strait of Hormuz back at the centre of the energy risk premium

• CENTCOM struck IRGC targets in response to attempted attacks on commercial shipping in Hormuz and on US personnel, hitting Iran's southern coast including Bandar Abbas, Chabahar, Konarak and Qeshm Island

• Iran fired 13 ballistic missiles at US bases in Jordan, with Jordan's military intercepting 10 and three falling in remote areas, and the IRGC vowing a response several times greater than the US attacks

• Trump threatened escalation, saying Iran would be hit at a much harder level and that a bigger attack was still waiting in the wings, while claiming Iranian radar rebuilt around the strait had been destroyed

• Hormuz traffic remains well below pre-war levels despite Trump saying the strait is clear of mines, with roughly a fifth of global oil supply moving through the waterway before the conflict

• The war is in its seventh month, with Washington leaning on secondary sanctions on buyers of Iranian crude and Trump's approval at 33% ahead of November's midterms

Global bond yields back at 2008 highs as rate hike bets build

[8:40 am] A synchronised selloff has pushed sovereign yields to levels last seen before the financial crisis, driven by oil-fed inflation, wide fiscal deficits and record corporate issuance, and it is starting to weigh on the global equity rally

• Global sovereign yields rose to 3.72%, the highest since mid-2008, with Japan's 10-year touching 3% for the first time since 1996 and UK 30-year yields at 1998 levels

• US 10-year at 4.79% and the 30-year at 5.26%, back to where they sat before Bessent's 19 August move to at least double Treasury buybacks, which do not begin until 9 September

• Australian 10-year yields notched their sharpest rise in five months to 2011 highs, with 30-year yields at a record in data going back to 2016, partly on fears of fewer Japanese buyers for Australian debt

• Fed hike odds near 70% for the 15-16 September meeting, which would be the first increase since 2023, with an ECB rise fully priced for next week and a BoJ hike near certain this month

• Investment-grade issuance has reached almost US$1.5trn this year, up 36%, with roughly US$200bn from the largest tech firms equal to about 25% of Treasury net issuance to private investors, five times the 2025 share

Good morning!

[8:26 am] ASX 200 futures are down 79 pts (-0.88%). Here's what happened overnight:

• Stocks are set to fall on Wednesday after Wall Street finished broadly lower following US strikes on IRGC targets in Iran and bond yields continuing to hit fresh multi-year highs

  • S&P 500 (-0.71%), Nasdaq (-1.03%), Dow (-0.79%), Russell 2000 (-1.23%)

• Brent rose ~5% overnight to US$95 a barrel, up ~35% since the 2-Jul low. What's worse is that a downstream barometer like US diesel futures (NY Harbor ULSD) surged 6.0% to all-time highs

• The global bond rout deepened as Japan's 10-year yield hit 3% for the first time since 1996 and gilts led a worldwide selloff, with Fed hike odds for September now near 70%