Ahead Today
G3: Eurozone Consumer Confidence, US Richmond Fed Manufacturing Index
Asia: Taiwan Export Orders
Market Highlights
Risk sentiment improved, the Dollar was slightly stronger, while DM yields were stable, as optimism around Meta’s new personal assistant Muse boosted sentiment around the next phase of AI together with general positive tones out of US-China talks. In particular, Meta’s new artificial intelligence agent, Muse, rose to the top of the mobile charts in the US, and fueled optimism among chipmakers including AMD and Intel. Muse is a personal AI assistant that can complete tasks of a person’s behalf including shopping, planning and booking, is able to connect to a variety of social platforms and third-party services, and importantly, also touts itself as being designed with security in mind with a separate login manager for sensitive information such as passwords. The User Interface also seems intuitive and certainly designed for the consumer in mind.
Overall, Meta’s Muse might well be the consumer facing manifestation of AI agents, in a way Claude Cowork and ChatGPT currently are the business facing applications for now. And with Meta already having a meaningful advantage in terms of distribution and understanding of its user behaviour, the starting point seems quite positive. Over time, we could well see other consumer facing companies in China such as Alibaba and Tencent roll out similar features.
If the above on consumer AI agents is right, this could well be the spark towards the next billion users and perhaps the next phase of AI growth. All this is not to discount the continued issues around privacy and security of agentic workflows of course, and this will be something tech companies will continuously need to address and work on moving forward.
The winners may nonetheless shift away from the need to produce ever more intelligent models, towards more applications which can orchestrate existing generations of models. As such, models may continue to be commoditized, with value shifting more towards the application phase.
For Asia FX and rates, this could mean continued strength in the infrastructure build-out, but with less focus on model training and continued shift towards the inference layer and also less focus on the most advanced chips as tech companies build for consumers.
We continue to be positive on the AI story for Asia and our base case is for some modest slowing in exports in 2027 and importantly for overall growth to remain robust. We as such continue to like KRW, TWD, and to some extent the tech linked currencies in Asia such as MYR and SGD. CNY should also continue to do well with contained volatility ahead of the Trump-Xi summit.