NewzMSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5% and was on track for a weekly decline of 1.7%. (EPA Images pic)SYDNEY: Asian shares fell on Friday as investors grappled with wild swings in bond and currency markets ahead of key US jobs data, while a widening military buildup in the Gulf kept oil prices elevated.Bond markets were again the centre of volatility overnight, with the benchmark 10-year US Treasury yields hitting the highest since 2002 at 5.34% after capping the biggest quarterly rise in 32 years. They later retreated and were steady at 5.2512% in Asia.Fiscal worries in France pushed the spread between French and German sovereign bond yields above 140 basis points, the widest since 2012, rattling European stocks and hitting the euro hard.
The single currency slid as far as US$1.1215, the lowest since May 2025, and sank against the yen and the Swiss franc.In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5% and was on track for a weekly decline of 1.7%. Japan's Nikkei dropped 0.7% but was set for a gain of 3.1% for the week.Mainland Chinese markets are closed for a public holiday through Wednesday of next week.Nasdaq futures rose 0.3% and S&P 500 futures inched up 0.1% after the pullback in Treasury yields helped Wall Street stage a late rebound.All eyes are on the US nonfarm payrolls due later in the day. Forecasts are centred on a rise of 90,000 jobs in September, while the employment rate is likely to be steady at 4.1%.
Much attention will be on hourly earnings after the ISM survey showed a huge jump in prices paid, pointing to more cost pressures."With the Fed now myopically focused on inflation and price pressures, a hot wages print could prove particularly influential for US rates, Treasuries and the USD," said Chris Weston, head of research at Pepperstone."Risk assets have so far absorbed the rise in US real yields, and long-end nominal Treasury yields remarkably well. However, a sustained increase in term premium could be far more problematic."Markets currently price in a 25% probability that the Fed will raise interest rates again in October, down sharply from 69% a week ago after two top policymakers staked out an unusually clear case for taking in more data before deciding what to do next with interest rates.However, a hike in December is still fully priced in. The euro stood at US$1.1237, near its lowest level since May 2025, dragged by worries around France's fiscal health.
(EPA Images pic)SINGAPORE: The US dollar headed for its third straight week of gains on Friday, perched at a 17-month high as a bond market rout pushed borrowing costs across the globe to multi-decade peaks in the face of inflationary fears over higher oil prices.Investors were reeling from a steep global bond sell-off on Thursday that sent yields on benchmark US 10-year Treasuries to 5.344%, their highest since 2002, ahead of a US jobs report that could influence the near-term policy outlook.The 10-year yield was last at 5.249% in early trading on Friday while the rest of the bond market also steadied.The euro was at US$1.1237, hugging its lowest level since May 2025, dragged by worries around France's fiscal health. The yen was steady at 158 per US dollar after data showed annual core inflation in Tokyo accelerated in September at the fastest pace in 10 months.The dollar index, which measures the US currency against six rivals, was at 102.08, set for a 1% gain this week, its third consecutive weekly gain, a run it last had in May 2025.Charu Chanana, chief investment strategist at Saxo, said investors are confronting the uncomfortable mix of sticky inflation, heavy government borrowing and large bond supply."The fact that long-end yields are pushing higher even as expectations for an immediate Fed hike have eased suggests this is increasingly about the term premium and fiscal risk, not just the next Fed decision," she said.Data on Wednesday showed US consumer prices rose less than expected in August, along with downward revisions to July's figure, leading traders to rein in wagers of a rate hike from the Federal Reserve later this month.Two of the Fed’s top policymakers this week staked out an unusually clear case for taking in more data before deciding about another hike.That has sharpened the focus on the US payroll report due later in the day, with data likely to show that job growth slowed in September and the unemployment rate is forecast to have been 4.1% for a third straight month."With the Fed now myopically focused on inflation and price pressures, a hot wages print could prove particularly influential for US rates, Treasuries and the USD," said Chris Weston, head of research at Pepperstone.Brent crude futures were back above US$100…
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