Group 1 - The South Korean government approved a budget of 728 trillion won for the fiscal year 2026, marking an 8.1% increase from the previous year, which is significantly higher than the 2.5% increase this year, setting a record high for total budget expenditure [1] - The budget reflects a shift from a "tight" fiscal policy under the previous administration to an "expansionary" approach, focusing on stimulating growth through investments in artificial intelligence (AI) and research and development [1] - The R&D budget will increase from 29.6 trillion won to 35.3 trillion won, a 19.3% rise, the largest ever, aimed at accelerating innovation in six key sectors: AI, biotechnology, cultural content, defense, energy, and manufacturing [1] Group 2 - The defense budget will rise from 61.25 trillion won to 66.3 trillion won, with a focus on improving personnel welfare and developing advanced weapons such as next-generation stealth fighters, AI, drones, and robots, marking the first time the defense budget has increased by over 5 trillion won in a single year [1] - The budget for industrial policy will expand by 14.7% to 32.3 trillion won to support exporters affected by tariffs, while cultural industry spending will grow by 8.8% to 9.6 trillion won [2] - To finance the budget, the government plans to cut around 1,300 projects, freeing up 27 trillion won, but most of the new spending will rely on large-scale borrowing, pushing national debt to over 1,400 trillion won, which will account for 51.6% of GDP [2] Group 3 - The government aims to stimulate the economy through expansionary fiscal policies, which are expected to lead to a rebound in tax revenues, creating a virtuous cycle of "financing through finance" [3] - The budget will be submitted to the National Assembly for review in early September, with final approval expected in December [3]

Core Viewpoint - The Brazilian government has launched a new social project called "Gás do Povo" aimed at providing free cooking gas to low-income households, with an annual cost of approximately 5.1 billion reais, fully integrated into the federal budget for 2026, ensuring fiscal sustainability [1] Group 1: Project Overview - The "Gás do Povo" project is designed to benefit around 17 million households registered in the social unified registration system, impacting over 50 million people [1] - The project will begin in November 2025, providing approximately 65 million gas cylinders for free to eligible families through 58,000 distribution points nationwide [1] Group 2: Financial Aspects - The annual cost of the project is estimated at 5.1 billion reais, which has been incorporated into the federal budget framework for 2026 [1] - The project emphasizes fiscal responsibility while ensuring that vulnerable groups receive essential energy support through full gas subsidy vouchers [1]

Group 1 - The core viewpoint is that overseas long-term bond yields are experiencing significant increases, with Japan, the UK, and the US seeing record highs in their long-term bond yields [1][2][3] - In the US, the expectation of Federal Reserve rate cuts is primarily affecting short-term rates, while long-term rates are rising due to concerns about persistent inflation and potential second-round inflation risks [1][2] - The 30-year Japanese government bond yield reached 3.28%, the highest on record, while the UK’s 30-year bond yield climbed to 5.75%, the highest since 1998 [1][2] Group 2 - Concerns about fiscal sustainability are rising in other economies, particularly in Japan and the UK, where persistent inflation and large fiscal deficits are leading to expectations of increased taxation or spending cuts [2][3] - Japan's central bank is now expected to raise interest rates earlier than previously anticipated, with market expectations shifting from April to January or March [2] - The UK’s inflation rate reached 3.8% in July, raising doubts about the Bank of England's ability to cut rates this year [2] Group 3 - Seasonal factors are contributing to poor performance in long-term bonds, with historical data showing that September is typically a weak month for long-term bonds [3] - The current environment is characterized by a peak in corporate bond issuance, which is exacerbating supply-demand mismatches in the bond market [3] - Investment-grade dollar bond premiums are at near-low levels, prompting increased corporate bond issuance, with over $90 billion issued recently [3] Group 4 - The rising yields on overseas long-term bonds may enhance their attractiveness relative to equities, potentially leading to increased allocations from institutional investors [4] - Concerns about the independence of the Federal Reserve and the "stagflation" environment in developed economies are creating downward pressure on both bonds and currencies, while gold may benefit in this context [4] - The US 30-year bond yield remains relatively stable, but yields in Japan and the UK continue to rise, indicating potential for further increases [4]

Core Viewpoint - The British pound has experienced significant volatility, primarily due to concerns over fiscal sustainability and political uncertainty in the UK, leading to a notable decline against the US dollar [1] Group 1: Currency Performance - As of September 4, the GBP/USD exchange rate is at 1.3434, reflecting a slight decrease of 0.04% from the previous close of 1.3440 [1] - The pound fell sharply by 1.15% on September 2, marking the largest single-day decline in nearly two months [1] Group 2: Economic Factors - The UK government's borrowing costs have risen to their highest level since 1998, indicating strong market concerns regarding fiscal stability [1] - Prime Minister Starmer's urgent reshuffle of the senior economic advisory team has raised investor doubts about the continuity and stability of economic policies, further undermining market confidence [1] Group 3: Market Reactions - A widespread sell-off in major global bond markets has led to a significant increase in UK bond yields, intensifying downward pressure on the pound [1] - The daily chart for GBP/USD indicates a double top reversal pattern, with key moving averages suggesting potential for further upward movement, although caution is advised due to the current market conditions [1]

Core Viewpoint - Japan's fiscal budget application for FY2025 has reached a record 122.4 trillion yen (approximately 822 billion USD), reflecting a 4.1% increase from the previous year, driven by rising defense spending and debt financing costs [1] Group 1: Budget Application Details - The total budget application amount is 122.4 trillion yen, with a historical high debt financing demand of 32.4 trillion yen, accounting for 26.5% of the total budget application [1] - The initial budget applications are typically reduced during the budget compilation process, with the current fiscal year's application expected to be compressed to 115.2 trillion yen [1] Group 2: Economic Context - The increase in budget applications is influenced by Japan's aging population, which necessitates the maintenance of social services while facing rising borrowing costs due to the Bank of Japan's gradual interest rate hikes [1] - The rising bond yields are directly impacting government borrowing costs, posing new challenges to Japan's fiscal sustainability [1]

Core Points - Japan's fiscal budget application for FY2025 reached a record 122.4 trillion yen (approximately 822 billion USD), marking a 4.1% increase from the previous year [1] - The debt financing requirement hit a historical high of 32.4 trillion yen, accounting for 26.5% of the total budget application, indicating significant fiscal pressure [1] - The rising borrowing costs due to the Bank of Japan's gradual interest rate hikes are posing new challenges to Japan's fiscal sustainability [1] Summary by Category Budget Application - The total budget application for FY2025 is 122.4 trillion yen, reflecting the need to maintain social services amid an aging population and rising borrowing costs [1] - The initial budget applications are typically reduced in the subsequent budget preparation process, with this year's application expected to be compressed to 115.2 trillion yen [1] Debt Financing - The debt financing demand reached a record 32.4 trillion yen, highlighting the direct impact of rising bond yields on government borrowing costs [1] - This high level of debt financing reflects the ongoing fiscal challenges faced by the government in managing its budget [1] Economic Environment - The gradual interest rate hikes by the Bank of Japan are increasing government financing costs, complicating the maintenance of necessary social services [1] - The changing interest rate environment is creating new challenges for Japan's fiscal sustainability [1]

Group 1: Market Overview - European financial markets experienced a significant sell-off on September 2, with the British pound dropping 1.52% against the US dollar, reaching a low of 1.3340, marking the largest single-day decline since April 7 [2] - The German stock index fell over 2%, while the UK 30-year government bond yield surged to its highest level since 1998, reaching 5.69% [1][4] - In the US, major stock indices also faced sharp declines, with the Nasdaq dropping over 1% and the VIX index rising more than 19%, indicating increased market volatility [1] Group 2: Bond Market Dynamics - The rise in bond yields across Europe is attributed to increased fiscal spending by various countries to address geopolitical security and economic recovery, leading to concerns about the sustainability of public finances [4] - The UK 30-year bond yield reached 5.69%, while Germany's and France's yields also saw significant increases, with Germany at 3.40% and France surpassing 4.5% for the first time since 2011 [4] - Analysts noted a "vicious cycle" where rising debt concerns lead to higher yields, which in turn exacerbate debt dynamics [4] Group 3: Policy and Economic Implications - Concerns over the sustainability of UK public finances were heightened by proposals for a windfall tax on bank reserves, which could further pressure the British pound [5] - The UK government is expected to implement additional tax measures, raising fears of increased fiscal pressure [5] - Historical data indicates that September is typically a challenging month for long-term bonds, with a median loss of 2% over the past decade for bonds with maturities over 10 years [5] Group 4: Pension System Reforms - Structural reforms in the Dutch pension system are impacting the long-term bond market in Europe, as the new system encourages younger members to invest more in equities, reducing demand for long-duration hedging instruments [6] - The Dutch pension savings account for over half of the EU total, holding nearly €300 billion in European bonds [7] Group 5: Inflation and Monetary Policy - Uncertainty regarding interest rate cuts in Europe is influenced by inflation pressures, with the Eurozone's August CPI rising to 2.1%, above July's 2.0% [8][9] - The core inflation rate remained at 2.3%, exceeding market expectations, while service sector inflation showed signs of slowing down [8] - Market expectations suggest a 25% chance of the European Central Bank (ECB) cutting rates before December, amid ongoing economic growth and inflation risks [8][9]

Group 1 - In August, the yields on 30-year government bonds in Germany and France rose by approximately 15 and 27 basis points, reaching the highest levels since 2011 [1][2] - The global bond market faced renewed pressure due to persistent inflation concerns and increased fiscal spending and refinancing needs, leading to a decline in investor risk appetite for long-term government bonds [1][2] - Japan's long-term bond yields hit a historical high, while the UK long-end bond yields are expected to record the largest monthly increase since December of the previous year [1][2] Group 2 - The French market is under scrutiny as Prime Minister François Bayrou announced a confidence vote regarding debt reduction plans on September 8 [2] - If the political crisis in France worsens, the spread between French and German bond yields could potentially widen to 100 basis points for the first time since 2012 [2] - The yield on French 10-year government bonds reached a five-month high of 3.54% before slightly retreating to 3.49%, while the German 10-year yield increased by 1 basis point to 2.70% [2] Group 3 - A supply peak in the European and US bond markets is anticipated in the coming months, with an expected issuance of over €100 billion (approximately $117 billion) in European government bonds in September and October [4] - Concerns about supply-demand imbalances have intensified due to weak demand observed in recent auctions of Japanese 10-year and US 30-year bonds [4] - Analysts suggest that as supply surges, investors will require higher yields as compensation, which will further increase market volatility [4] Group 4 - Concerns regarding the sustainability of US fiscal policy and the independence of the Federal Reserve are driving up the risk premium on US Treasury bonds [5] - If inflationary pressures do not fully subside and the Federal Reserve relaxes its policies too quickly due to political pressure, it could trigger a new surge in long-term yields and increased volatility in the bond market [5]

Group 1 - Japan's Ministry of Finance has requested a record 32.4 trillion yen (approximately 219 billion USD) for debt repayment in the next fiscal year, reflecting the impact of rising government bond yields on public finances [1][2] - The requested amount represents a 15% increase compared to the initial budget of the previous fiscal year, significantly exceeding the 3% inflation rate during the same period [1] - Debt repayment expenditures currently account for about one-quarter of Japan's national budget, indicating a growing financial burden on the government [1] Group 2 - The total budget request from the Ministry of Finance amounts to 34.1 trillion yen, with the majority allocated for debt servicing and a small portion for overseas development assistance [2] - Japan, as one of the developed economies with the heaviest debt burden, faces increasing costs due to an aging population and expanding social security needs [2] - The Bank of Japan's gradual interest rate hikes have directly increased government debt costs, with the 10-year government bond yield reaching its highest level since the 2008 financial crisis [2]

Group 1 - Japan's Ministry of Finance has requested 32.4 trillion yen (approximately 219 billion USD) for debt repayment in the next fiscal year, marking the highest debt servicing budget in history [1][2] - This request represents a 15% increase compared to the initial budget of the previous fiscal year, significantly exceeding the 3% inflation rate during the same period [1][2] - Debt repayment expenditures currently account for about one-quarter of Japan's national budget, reflecting the growing financial burden on the government [2][3] Group 2 - The total budget application by the Ministry of Finance amounts to 34.1 trillion yen, with the majority allocated for debt servicing and a small portion for overseas development assistance [3] - Japan, as one of the developed economies with the heaviest debt burden, faces substantial costs associated with maintaining its debt, exacerbated by an aging population and increasing social security demands [3] - The Bank of Japan's gradual interest rate hikes have led to rising government debt costs, with the 10-year government bond yield reaching its highest level since the 2008 financial crisis, driven by expectations of further monetary policy normalization and concerns over long-term fiscal sustainability [3]