Macro Snapshot: China Stocks Hit 9-Day Streak; Japan Devalues Defense Assumptions

Global financial markets showed mixed momentum on Monday as traders positioned themselves for the release of the Federal Reserve's meeting minutes later this week.

China Sentiment Improves

Mainland Chinese markets continue to decouple from global jitters, with the Shanghai Composite recording a rare 9-day winning streak to close near 3,965. The rally is underpinned by sector-specific strength in advanced materials (PEEK, carbon fiber) and expectations that Beijing will ramp up fiscal spending in 2026 to counter external tariffs. This resilience in A-shares is providing a mild tailwind for the Yuan (CNY), despite the broader strength of the US Dollar.

Japan's Fiscal Reality Check

A subtle but critical shift occurred in Tokyo's fiscal planning. The Japanese government approved a massive 9 trillion yen defense budget for fiscal 2026, a 67% increase from 2022 levels. Crucially, budget planners revised their exchange rate assumption from 108 JPY/USD to 149 JPY/USD.

Analyst View: This official accounting revision signals that Tokyo does not expect the Yen to appreciate significantly in the medium term. It serves as a tacit admission that the ultra-loose monetary policy era has permanently reset the rigid valuation of the Yen, potentially limiting the Bank of Japan's room to maneuver aggressively in the coming year.