A lull in bond selling has stretched into Friday, but may not last the day as investors waited on U.S. jobs data that could add to the case for keeping interest rates high for some time.
Oil’s flip from surging to sliding has also provided respite, with Brent crude futures at $84.50 a barrel, some $13 or 13.5 percent cheaper than last week’s 11-month high.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.9 percent. Tokyo’s Nikkei was flat and currency markets were similarly steady, though the bond rout has the dollar headed for a record 12th straight week of gains.
Ten-year U.S. Treasury yields were mercifully steady at 4.72 percent through the Asia session, but have climbed 55 basis points in a five-week-long selloff that has dragged on bond markets and appetite for risk-taking around the world.
“The recent sharp sell-off has the paradoxical power to sow the seeds of its own reversal,” said analysts at Rabobank, since tighter financial conditions will weigh on demand, and increase the likelihood that policy rates are peaking and not pausing.
Nobody was placing big bets, however, before the publication of U.S. non-farm payrolls data at 1230 GMT.
Economists polled by Reuters’ expect it to show 170,000 U.S. jobs were added last month, though estimates range as high as 256,000.
“It’s hard to disentangle where people are sitting, but the market won’t want to see a strong number for sure,” said Jason Wong, strategist at BNZ in Wellington.
INTERLUDE
Another round of bond selling would likely propel the dollar further along a weekly winning streak that is already its longest ever against the euro. The dollar index is up 12 weeks in a row, equalling a streak that ran from July to October 2014.
The run-up has the euro, at $1.0542, pinned near an 11-month low and sterling not far from a seven-month trough. The dollar index was steady on Friday at 106.4.
“A push through 107 would provide technical evidence of trend continuation,” said Capital.com analyst Kyle Rodda.
Surprisingly, only the beleaguered yen has showed much of a fight, since a sudden jump in the Japanese currency during London afternoon on Tuesday stoked speculation authorities had intervened.
Japanese money-market data showed no anomalies of a kind that might have accompanied intervention. But the move was eye-catching enough to keep traders on their guard.
The yen was last steady at 148.5 per dollar. Gold was also steady at $1,822 an ounce after nine days of losses driven by rising global bond yields.
“This may be just a brief pause while we wait for labour market data and next week’s U.S. Treasury supply and CPI data,” said SocGen strategist Kit Juckes.
“If the labour market data are strong, pressure will return sooner than it did last year. I still think the Treasury market will take yields higher until something breaks in the system.”
Source: https://www.channelnewsasia.com/business/stocks-climb-calm-potential-us-payrolls-storm-3825701
