Before examining the relationship between technology and US Treasuries, it is worth reviewing two key observations. First, the US Treasury bear market and the Nasdaq bull market have moved in tandem for five consecutive years. Second, during the second half of 2022 through the first half of 2023, markets harbored similar concerns about whether US Treasury liquidity shocks would spill over into equities, and the Silicon Valley Bank episode in early 2023 brought those worries to a head. Historical data, however, demonstrates that US Treasury dynamics have not been the ultimate determinant of the Nasdaq's trajectory. Some may argue that circumstances now differ from the past, given that after 2025, US tech companies will face increasingly large capital expenditures, growing reliance on off-balance-sheet financing, and richer market valuations, which could make the Nasdaq non-linearly more sensitive to Treasury moves. We do not dismiss this view, but we continue to emphasize that historically, US tech bull markets have ended due to industrial bottlenecks. Liquidity merely amplifies underlying industry trends. Therefore, the focus going forward should be on the technology sector's internal growth drivers, particularly where the next demand application will emerge, alongside the US's actual inflation-control strategy and how it seeks to rebalance global supply and demand.
This week, global equity markets maintained a range-bound tone. In the US, the dominant pricing variable shifted to the Federal Reserve's monetary policy trajectory, with short-end policy pricing fluctuating throughout the week, while the energy sector outperformed. China's A-share market declined with accelerated style rotation, highlighting a stock-picking environment, as tech growth sectors led losses and value sectors displayed defensive resilience. H-shares fluctuated but closed marginally higher, showing extreme divergence across sectors. Amid volatile Fed policy expectations and geopolitical tensions, low-valuation, high-dividend sectors strengthened on safe-haven and dividend-allocation demand. Chinese government bond yields traded in a narrow band, while most overseas rates moved higher. After the month-end, liquidity conditions eased, and the long and short ends of the bond curve diverged: short-term yields rose slightly, while long-term yields fell on policy expectations. US Treasury yields rose across the week, with the belly of the curve leading gains. Energy prices and Fed officials' communications drove Treasury pricing, with yields initially climbing to yearly highs before pulling back. Most non-US developed economy bond yields also rose.
Commodities saw energy and chemicals lead gains. The overall pattern featured energy and chemicals outperforming, precious metals retreating, and copper demonstrating relative strength. The core drivers remained Middle East geopolitical tensions, including US-Iran dynamics and Hormuz Strait transit risks, coupled with repeated Fed policy signals, interweaving supply-side disruptions with macro headwinds.
Where to start
Looking at Chinese equities, the A-share market experienced a downward week with accelerated style rotation, emphasizing stock-picking conditions. Tech growth sectors led the decline, while value sectors showed defensive resilience. By industry, media, banking, and comprehensive finance led gains for the week, while electronics, non-ferrous metals, and basic chemicals saw the largest pullbacks. In Hong Kong, the market rebounded from early losses to close slightly higher, displaying extreme sector divergence. Against volatile Fed policy expectations and geopolitical tensions, capital seeking safe havens and dividends drove low-valuation, high-yield sectors like banking, insurance, and brokerages higher, underpinning the index. Meanwhile, growth tech and cyclical sectors continued to retreat amid rising external rate-hike expectations and weak domestic demand.
Market participation in A-shares is still cooling, making a sustained one-way rally unlikely. With trading activity declining and outside capital adopting a wait-and-see stance, coupled with overhead supply pressure, any rebound will likely face choppy conditions. Strategically, investors should build positions opportunistically along the repair trajectory, focusing on three areas with strong visibility: first, AI upstream semiconductor equipment and materials, where earnings delivery is more certain and pullbacks offer attractive valuations; second, upstream resources benefiting from both a weaker dollar and supply constraints, including chemicals and industrial metals; third, sectors with earnings resilience and relatively low valuations, such as non-bank financials.
For Hong Kong markets, next week's US inflation data becomes the core focal point for global asset pricing. Friday's US August non-farm payrolls significantly beat expectations, with 162,000 jobs added, well above forecasts, while the unemployment rate held at 4.1% and average hourly earnings rose 3.1% year-over-year. Following the strong jobs report, markets rapidly raised bets on a Fed rate hike in September, with fed funds futures lifting the probability from roughly 50% to slightly above 60%. While the jobs data were robust, the upcoming August CPI inflation reading is widely viewed as the true decisive variable for the Fed's September 15-16 meeting, making next week's inflation data the central focus for global asset pricing.
Navigating China's bond outlook
In China's bond market, liquidity eased after the month-end crossover, with yields trading in a narrow range. Mid-week, policy expectations prompted some yield declines. Performance diverged between the long and short ends: short-term yields rose 2 basis points to 1.22% on the 1-year government bond, while long-term yields fell, with the 10-year down 1.4 basis points to 1.68% and the 30-year down 2.3 basis points to 2.17%. The biggest change for September is not a fundamental bearish turn, but rather that with yields at low levels, the marginal drivers have shifted. Market expectations for looser monetary policy persist, but the central bank's stance, equity-bond correlation dynamics, and bond supply are all constraining long-end downside potential, making further yield-chasing unattractive. Unless economic data weaken significantly again or rate-cut expectations revive, the long end will likely remain in range-bound trading in September, and extending duration is not advisable.
US equities in a holding pattern
US equities saw narrow index movements this week: the S&P 500 rose 0.09%, the Nasdaq Composite gained 0.40%, the Russell 2000 added 0.11%, and the Dow declined 0.27%. The Philadelphia Semiconductor Index rose 2.32%, with gains concentrated in the final trading session. The equal-weight S&P 500 fell 0.77% for the week, indicating that index support was driven by heavyweight stocks. The VIX closed at 14.53, roughly flat from last week. By sector, energy led gains with 2.20%, information technology rose 0.86%, and utilities added 0.82%, while consumer discretionary fell 1.96%, materials dropped 1.39%, and real estate lost 1.24%. Brent crude surged 7.8% for the week, lifting the energy sector to the top spot. On the earnings front, Broadcom's fourth-quarter revenue guidance of $34.8 billion came in below market expectations of $35.1 billion, with shares falling 2.74% the following day and 2.95% for the week. Nvidia rose 5.89% for the week on acquisition news.
Given the near-zero index-level change this week, we expect US equities to remain range-bound in the near term, with the dominant pricing variable shifting to the Fed's monetary policy path. Short-end policy pricing fluctuated throughout the week, with the implied probability of a September rate hike first falling to 50% and then recovering to 60%. Compared to labor market data, inflation figures carry significantly more weight in the short term: if August core inflation continues to decline, the heavyweight growth stocks and semiconductors that led this week should be positioned to sustain their relative strength. Next week, Adobe's earnings report on September 10 will be in focus.
Global rates and the Treasury curve
Energy prices and Fed officials' commentary formed the two dominant narratives for US Treasury pricing this week. Yields rose across the curve, with the belly leading gains. For the week, the 2-year yield rose 3 basis points to 4.37%, the 10-year gained 5 basis points to 4.78%, and the 30-year added 2 basis points to 5.24%. In the first two trading days, renewed Hormuz Strait conflict pushed oil prices up approximately 9%, sending the 10-year and 30-year yields to yearly highs of 4.79% and 5.27%, respectively. Subsequently, Fed Governor Waller indicated willingness to support holding rates steady if inflation progress continues, and the implied probability of a September hike fell from roughly 70% to 50%, resulting in a bull-steepening of the curve. Friday's stronger-than-expected non-farm payrolls lifted hike probabilities back to approximately 60%, re-steepening the curve. Most non-US developed government bond yields rose this week, with UK yields up about 8 basis points to 5.15%, German yields rising approximately 8 basis points to 3.35%, and Japanese yields easing about 2 basis points to 2.91%.
Looking ahead, Treasury yield direction will depend on the August inflation data due September 11, the first operation under the expanded Treasury buyback program, and the concentrated corporate and government bond issuance following the holiday. August non-farm payrolls shifted pricing pressure from the long end back to the short end; if August core inflation continues to moderate, we expect the middle and short segments of the curve to outperform. On the long end, the expanded long-dated buybacks starting September 9, concentrated corporate bond issuance, and Treasury auctions after the holiday are key points of focus. In the near term, ongoing Middle East tensions, energy prices, and fiscal pressures will continue to create headwinds for global bond markets, with major developed economy long-end yields facing elevated volatility. However, shifts in some central banks' policy expectations and the temporary easing of global bond selling pressure may limit any further rapid rise in yields.
Commodity markets and key drivers
This week's commodity market featured energy and chemicals leading gains, precious metals pulling back, and copper showing relative firmness. The core narrative remains Middle East geopolitical tensions, including US-Iran dynamics and Hormuz Strait navigation risks, combined with repeated Fed policy signals, interweaving supply-side disruptions with macro headwinds. Gold traded in a broad range around the central conflict of fluctuating Fed rate-hike expectations, compounded by US-Iran tensions and inflation concerns from higher oil prices. Crude oil rallied sharply this week as escalating US-Iran geopolitical tensions served as the primary catalyst, bolstered by Russian supply contraction and larger-than-expected US inventory draws, delivering the largest weekly gain since July. Copper traded with an upward bias, balancing macro hawkish pressure against supportive fundamentals.
For gold, near-term rate-hike expectations weigh on prices, but the medium-term upward foundation remains intact, and current volatility presents a window for positioning. In oil, as long as Middle East tensions show no clear signs of easing, prices will likely remain skewed higher, though news-driven volatility will be intense. For copper, sustained spot premiums on the LME, canceled warrants above 50%, and tight non-US inventories should continue to provide solid price support.
Currency markets and the USD trajectory
The foreign exchange market featured a pattern of initial dollar weakness followed by partial recovery, with non-US currencies experiencing divergent adjustments. The dollar index traded around 99.6 early in the week, fell sharply mid-week to approximately 98.9 following dovish Fed commentary, with markets pricing in no September hike and subsequent easing room, only to rebound quickly after Friday's strong jobs report, ultimately closing near 99.1. Overall, the dollar is not in a one-way decline but is instead oscillating between dovish Fed signals pressuring the currency and inflation and employment resilience limiting policy easing. Non-US currencies have not uniformly strengthened but have repositioned based on rate sensitivity, central bank policy expectations, and risk appetite. The yen is supported by BOJ rate-hike expectations, while high-beta currencies like the Australian and New Zealand dollars benefit from dollar weakness, though sustainability depends on risk appetite.
The dollar index will likely continue trading in the 98.8 to 99.8 range. If US inflation cools further, markets will reprice a September pause and subsequent easing, potentially pushing the dollar toward 98.5. However, if employment or inflation remains firm, the dollar may rebound to test 100. For the yuan, watch whether the fixing rate continues adjusting lower toward 6.77: if the fixing remains restrained, yuan appreciation will be gradual, but a clear downward adjustment could open room for USDCNH to move below 6.70. For the yen, the key is whether BOJ rate-hike expectations for September continue to strengthen; if US-Japan policy expectations continue converging, the yen should remain relatively stronger among non-US currencies.
Assessing risks and uncertainties
Key risks include AI trade crowding and deleveraging: if capital expenditure returns fail to meet expectations, profit-taking in crowded positions could amplify volatility. Fed policy path uncertainty also looms, as new Chair Warsh's communication framework may shift, and repeated rate-hike expectations, combined with stickier-than-expected inflation, could lift rates and the dollar, pressuring global risk asset valuations. Geopolitical risks remain elevated, as US-Iran Hormuz ceasefire and navigation arrangements are fragile, and renewed conflict could re-escalate oil price and inflation tail risks. Domestically, the sustainability of property and consumption recovery remains uncertain, with weak off-season demand and high-frequency data potentially dragging on cyclical sector performance.
Zhou Junzhi holds a PhD in Economics from Zhejiang University and serves as Chief Macro Analyst. She was ranked first in macro analysis in Wind's 11th Golden Analyst Awards in 2023, fourth in the 21st Century Gold Analyst macro category in 2023, and third in Choice's 11th Best Analyst macro category in 2023. From 2017 to 2020, she consecutively won first place in the New Fortune macro category as a core team member and first place in the Crystal Ball Award for sell-side analysts for four consecutive years. Fu Siyu is a macro analyst with a Master's degree in Economics from the Chinese University of Hong Kong, focusing on global fiscal policy and domestic bond market liquidity. This research report is titled "The Interplay Between Technology and US Treasury Yields," published on September 6, 2026, by China Securities Co., Ltd. Analysts: Zhou Junzhi and Fu Siyu. This content is for reference only and does not constitute investment advice. Investors should bear their own risks when acting on this information.