- 10-year US Treasury yield stable at 4.72%
- Dollar heads for record rise from previous week
- Payroll calculations in the US at 1230 GMT attract attention
SINGAPORE (Reuters) – A lull in bond selling continues into Friday, but that may not last as investors await U.S. jobs data that will provide evidence to keep interest rates high for some time. .
Brent crude oil futures were at $84.50 per barrel, about $13 (13.5%) lower than last week’s 11-month high, with the oil market’s high-to-low turn taking a breather.
MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) rose 0.9%. Tokyo’s Nikkei Stock Average (.N225) was flat and currency markets were similarly strong, but the dollar was headed for a record 12-week gain as bonds slumped.
The US 10-year Treasury yield, which was thankfully stable at 4.72% during Asian trading, rose 55 basis points in a five-week slide that dragged down bond markets and risk-taking appetite around the world.
Analysts at Rabobank said that “the recent sharp decline may itself sow the seeds of a reversal,” as tighter financial conditions weigh on demand and raise the possibility that policy rates will peak without stopping. It has this paradoxical power.”
But no one was making big bets until the U.S. non-farm payrolls numbers were released at 1230 GMT.
Economists polled by Reuters predict that U.S. payrolls USNFAR=ECI will increase by 170,000 jobs last month, but estimates vary by as much as 256,000.
“It’s hard to work out where people are sitting, but the market certainly doesn’t want strong numbers,” said Jason Wong, a strategist at BNZ in Wellington.
Another round of bond selling would extend the dollar’s already longest weekly winning streak against the euro on record. The dollar index has risen for 12 consecutive weeks, matching its streak of gains from July to October 2014.
On the uptrend, the euro is near an 11-month low at $1.0542, and the pound is near a seven-month low. The dollar index was stable at 106.4 on Friday.
“A break above 107 would provide technical evidence of trend continuation,” said Capital.com analyst Kyle Rodda.
Surprisingly, only the beleaguered yen has put up much of a fight since Japan’s currency suddenly appreciated on Tuesday afternoon in London, raising speculation that authorities may have intervened.
Japan’s money market data showed no anomalies of the kind that might be associated with the intervention. But the move attracted enough attention to alarm traders.
The yen was stable at 148.5 yen to the dollar. Gold prices were also steady at $1,822 an ounce after nine days of declines due to rising global bond yields.
“This may just be a pause while we wait for labor market data and next week’s Treasury supply and CPI data,” said Kit Jaquez, a strategist at SocGen.
“If the labor market numbers are strong, pressure will return faster than last year. I still think the Treasury market will push yields higher until something breaks in the system.”
Report by Tom Westbrook.Edited by: Shri Navaratnam
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