Asian stocks are poised for a weekly gain as bets on a US rate hike in September fade. The MSCI Asia-Pacific ex-Japan index climbed 0.97% on August 13, following the release of July's US Consumer Price Index, which came in at 0.1% month-on-month. This downward tick in inflation has sparked a broad rally in Asian equity markets, with South Korea's KOSPI surging 4.4% and Japan's Nikkei 225 adding 1.86%.
Market Reaction
The CME FedWatch tool shows the likelihood of a September rate hike dropping to around 40% from 54% the previous week. US 10-year Treasury yields sat at approximately 4.69% as of mid-August 2026, still elevated but with a trajectory that matters more than the level.
Outlook
The next major catalyst is the August CPI data, which will be released before the Federal Open Market Committee meets in September. If August inflation continues the downward trajectory seen in July, it could extend the rally in Asian equities.
