Trump cites ties with Kim Jong Un in ordering cuts to US-South Korea military exercises — August 18, 2026

Top U.S. Stories

• President Trump said Sunday he has instructed Defense Secretary Pete Hegseth to substantially reduce upcoming U.S.-South Korea joint military exercises, calling the drills costly and a “hostile” signal to North Korea. Why it matters: the move touches a decades-old alliance just as North Korea ramps up missile tests, and comes only hours before the exercises were due to begin — retired South Korean special-warfare commander Chun In-bum said “North Korea and China would be the ones most pleased by this.”
• Trump cited his good relationship with North Korea’s Kim Jong Un as one reason for the cutback, and separately said South Korea had declined to help with the “denuclearization” of Iran. Seoul’s Ministry of National Defense said the drills would “proceed as previously notified and scheduled.” Why it matters: it signals a divergence between Washington and Seoul over how to read the North Korea relationship at a moment allies expect coordination, not surprise announcements.
• The yield on 30-year U.S. Treasuries climbed to 5.31%, the highest level since 2007, as investors weighed swelling deficits, a wave of long-dated bond sales, and inflation running above the Fed’s target. Why it matters: higher long-term yields flow directly into mortgage rates and corporate borrowing costs, a headwind for both housing and equities.
• Jared Kushner held a rare, more-than-two-hour meeting with Hamas leadership in Egypt on Sunday, alongside envoys from Egypt, Qatar and Turkey, in a new push to salvage the stalled Gaza road map. Hamas officials said they are ready to hand governance of Gaza to a Palestinian technocratic government once it stands up. Kushner was scheduled to meet Israeli Prime Minister Netanyahu next.
• Stocks fell Monday as oil prices and Treasury yields jumped on renewed U.S.-Iran war fears: the Dow lost 107.58 points (-0.2%) to 53,732.41, the S&P 500 slid 13.23 points (-0.17%) to 7,785.76, and the Nasdaq Composite dropped 73.86 points (-0.28%) to 26,729.16, according to market data compiled by Yahoo Finance.
• An explosion at an oil facility in the Europoort section of the Port of Rotterdam killed one person and injured several others on August 13; Dutch police have not yet determined a cause.

Markets

Oil traded in the $82-a-barrel range Monday as traders assessed the still-unresolved standoff between Washington and Tehran over shipping through the Strait of Hormuz, with a bilateral memorandum reaching its deadline on August 16 without a breakthrough. The dollar bought roughly ¥159.2 as of Monday’s reference rate, keeping the psychologically important ¥160 level in view. In Tokyo, the Nikkei 225 rose for a fifth straight session, closing up 506.45 yen (+0.74%) at 69,220.25 — its first close above 69,000 in about a month and a half — led by AI and semiconductor names including Advantest and Kioxia, even as Japanese long-term yields touched roughly 2.930%, a level not seen in about three decades, on accelerating Bank of Japan rate-hike expectations.

Stocks in Focus

Kioxia Holdings, the NAND flash memory maker, reported fiscal Q1 (April-June 2026) net income up 46-fold year-on-year to ¥842.1 billion on July 31, driven by AI data-center demand — a rebound after its stock had tumbled from a June post-listing high. Semiconductor and AI-linked names broadly led Monday’s Tokyo gains, while energy and defense-adjacent sectors drew attention on the back of persistent Middle East tension and Monday’s alliance-policy shift. This is not investment advice; it’s a summary of what moved and why.

Compass Insight

Two forces are colliding today: a geopolitical realignment and rising financing costs. Trump’s decision to scale back drills with South Korea doesn’t touch household budgets directly, but the underlying tension it reflects — in Korea and in the Gulf — keeps showing up as pricier oil and higher borrowing costs. U.S. 30-year yields at their highest since 2007 and Japanese long rates near a three-decade high both point the same direction: mortgage and corporate financing costs face upward pressure on both sides of the Pacific. For Japan-based readers, a yen hovering near ¥160 keeps import costs — energy, food — in focus. Short term, watch Fed Chair Kevin Warsh’s upcoming Jackson Hole remarks and whether the Hormuz standoff eases. Medium term, the Bank of Japan’s rate path and the yen’s trajectory are worth tracking, alongside how far Tokyo’s AI-and-semiconductor rally can run against a backdrop of rising rates.