Key Takeaways
- The U.S. Dollar surged to multi-month highs, with the USD/JPY hitting 159.455 and the U.S. Dollar Index (DXY) touching 99.795.
- Japanese Government Bond (JGB) yields spiked across the curve, with the 10-year yield rising 4 basis points to 2.220%.
- ADNOC reduced onshore partner crude supply by 20% this month, diverting flows to Fujairah to bypass the increasingly volatile Strait of Hormuz.
- Indonesia’s stock market slumped 2.4% to 7,188 amid transparency concerns and regional geopolitical tensions.
- Bank of America (BAC) revised its Bank of England outlook, now expecting two 25 bp rate cuts in June and September.
Currency and Fixed Income Markets
The U.S. Dollar continued its aggressive rally on March 13, 2026, driven by safe-haven demand and sticky inflation expectations. The USD/JPY pair reached 159.455, its highest level since mid-2024, while the U.S. Dollar Index touched 99.795, marking its strongest point since late November. This currency strength is placing significant pressure on Asian markets and forcing a repricing of global interest rate trajectories.
In Japan, the bond market faced a sharp sell-off as yields climbed to multi-year highs. The 5-year JGB rose 4 basis points to 1.665%, the 10-year JGB hit 2.220%, and the 20-year JGB climbed to 3.090%. Market participants are increasingly concerned about the Bank of Japan's ability to maintain its current policy stance as the yen's weakness persists and global yields remain elevated.
Energy Security and Geopolitics
Energy markets are reacting to significant supply chain shifts in the Middle East. ADNOC has reportedly reduced crude supply to its onshore partners—including BP (BP) and TotalEnergies (TTE)—by 20% this month. These flows are being redirected to the port of Fujairah, allowing the UAE to bypass the Strait of Hormuz, which has seen heightened risk due to regional conflict.
In response to these disruptions, Japan’s Trade Minister Akazawa stated that the government and private sector will strive to secure alternative crude oil sources. Japan is exploring procurement from multiple regions to reduce its 95% reliance on Middle Eastern oil. Meanwhile, geopolitical tensions remain high following a rocket attack in a northern Israeli town that left 58 people with minor injuries.
Regional Economic Impacts
Southeast Asian economies are feeling the brunt of the current market volatility. The Indonesia Stock Market plummeted 2.4% to 7,188, continuing a downward trend fueled by MSCI transparency warnings and foreign capital outflows. Major Indonesian firms like Telkom Indonesia (TLK) and United Tractors (UNTR) remain under watch as rating agencies maintain negative outlooks for the region.
In Thailand, the University of the Thai Chamber of Commerce warned that a drop in European visitors is likely to impact the nation's vital tourism sector. Simultaneously, Malaysia's Finance Minister announced that government spending on RON95 petrol subsidies is expected to hit 2 billion RGT, highlighting the fiscal strain caused by elevated global energy prices.
Central Bank Outlook
Bank of America (BAC) has adjusted its forecast for the Bank of England (BoE), reflecting the increased uncertainty in the global macro environment. The bank now expects the BoE to deliver two 25 basis point rate cuts in June and September, a delay from previous expectations of a March cut. Analysts noted that while the labor market is weakening, the persistence of energy-driven inflation risks has forced a more cautious "wait and see" approach from policymakers.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.