〔Overnight Brief〕German 5Y Pierces 3% First Time Since 2008 as UK, Europe, Japan Track US Rout; Bessent Put Lifts EM FX to Record While USD/JPY Slips Below 159 — Bond Sell-Off vs Weak-Dollar Divergence

0. Overnight Arc

The US bond sell-off that began overnight spilled into global rates: Germany's 5-year hit 3% for the first time since 2008, while UK, European, and Japanese debt tracked the move on Trump-policy and Iran-war inflation fears ^[1][2]. Yet the US dollar weakened, lifting emerging-market currencies to a fresh record on renewed "Bessent Put" appeal after US Treasury Secretary Scott Bessent said buyback scale can be increased ^[3][4]. USD/JPY slipped back below 159, -0.04% on the day ^[5], as S&P Global's former vice chairman Paul Sheard framed intervention as "buying time" and tipped a 25bp BoJ hike in September ^[6].

1. Global Rates: The Bond Rout Spreads

• **[ESCALATED]** German 5-year yield up 1bp, first time through 3% since 2008 ^[2].
• **[NEW]** UK, European, and Japanese yields dragged higher on US bond turmoil tied to Trump economic stewardship and the Iran war's inflation pass-through ^[1].
• **[ONGOING]** Bessent's "buyback scale can be increased" remark pulled US yields back intraday ^[3]; the "Bessent Put" framing is now in market circulation ^[4].
• **[NEW]** Poland targets a 30% corporate income tax on large utilities and fuel firms by 2027 ^[7].

2. FX: Dollar Weakness, EM Record, Japan Watch

• **[NEW]** USD/JPY broke below 159, -0.04% on the day ^[5].
• **[NEW]** EM currencies hit a fresh record on a weak dollar and carry-trade appeal; oil's push above $93/bbl only partially offset ^[3][4]. South Korean tech led an EM equity rebound ^[4].
• **[ESCALATED]** Paul Sheard (former S&P Global vice chairman): US-Japan intervention "buys time"; expects BoJ to hike 25bp in September; yen is ~40% below its long-run average since the mid-1980s per Morgan Stanley ^[6].
• **[NEW]** Brazil central bank will not hold FX swap rollover auction on Aug 21 ^[8].
• **[NEW]** Chile central bank sold $84m FX forwards at an average CLP 922.80/USD ^[9].
• **[NEW]** Pakistan central bank FX reserves rose $25m to $17.1bn ^[10].

3. Europe: Equities Slide, Germany "Slight" Growth

• **[ESCALATED]** Stoxx 600 -0.1%, extending the longest losing streak since Sept 2023 ^[3]. Consumer staples and retail lagged; energy led as Brent pushed through $93/bbl on US-Iran jitters; European gas hit a five-month high ^[3].
• **[NEW]** Bundesbank: German Q3 GDP will grow "slightly" ^[11].
• **[ONGOING]** Morningstar EMEA chief equity strategist Michael Field: investors remain confident in equities but acknowledge macro and geopolitical instability ^[3].

4. Americas (ex-US) and Asia Data

• **[NEW]** Canadian Trade Minister Dominic LeBlanc: Canada and US are "very close" to a deal, talks ongoing, team staying in Washington until terms are finalized ^[12][13][14].
• **[NEW]** Citi survey: Mexico 2026 CPI expectation trimmed to 4.00% from 4.02% ^[15].
• **[NEW]** Argentina's July trade surplus $2.115bn vs $1.850bn expected ^[16].
• **[NEW]** South Korea July PPI -0.4% m/m (first monthly drop since Aug 2025), +7.7% y/y ^[17][18].
• **[NEW]** India allowed duty-free sugar imports per government order ^[19].