Key facts
- Asian shares and bonds rallied, with the yen strengthening, as markets awaited U.S. economic data and central banker commentary for Federal Reserve policy signals.
- U.S. 10-year Treasury yields fell to 4.784% after reaching multi-year highs, and Japanese government bond yields declined from recent peaks.
- Oil prices eased from elevated levels amid ongoing uncertainty regarding U.S.-Iran military actions.
- Traders are pricing in a higher probability of a 25-basis-point Federal Reserve rate hike this month.
- Japan's services sector showed robust growth in August, expanding at its fastest pace in five months.
Asian markets experienced a relief rally on Thursday, with shares and bonds advancing and the yen strengthening, as investors awaited key U.S. economic data and central banker commentary for signals regarding the Federal Reserve's potential interest rate decision this month. Japanese government bond yields declined from historic peaks, mirroring a recovery in Treasuries. Oil prices edged lower from elevated levels amid prevailing uncertainty over renewed military actions between the U.S. and Iran. The market's immediate focus is on Friday's U.S. payrolls report, following weaker-than-expected private labor data. Fed Governor Christopher Waller is scheduled to speak, with expectations tempered by comments from Fed President John Williams. Analysts suggest that a resolution to the Middle East conflict could ease inflationary pressures, allowing central banks to return to normal policy considerations. The MSCI Asia-Pacific ex-Japan index rose 0.5%, while the dollar index fell slightly. U.S. Treasury yields eased overnight from multi-year highs, with the benchmark 10-year note yield falling to 4.784%. Traders have increased their bets on a 25-basis-point Fed rate hike this month. Policy meetings from the European Central Bank and the Bank of Japan are also under scrutiny for indications on further monetary tightening amid persistent inflation.