- The 10-year Treasury bond yield stabilized at 4.72%
- The dollar is on track to set a record streak from week to week
- All eyes are on US payrolls at 1230 GMT
SINGAPORE (Reuters) – A lull in bond selling extended into Friday, but it may not last all day as investors await U.S. jobs data that could add to the case for keeping interest rates high for some time.
Oil’s shift from high to low also provided some relief, with Brent crude futures reaching $84.50 per barrel, about $13, or 13.5%, below the 11-month high hit last week.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.9%. Tokyo’s Nikkei was flat (.N225) and currency markets were similarly steady, although a bond decline pushed the dollar to record gains for a 12th straight week.
Ten-year US Treasury yields remained steady at 4.72% during the Asian session, but rose by 55 basis points in a five-week sell-off that affected bond markets and risk appetite around the world.
“The recent sharp sell-off has the paradoxical power to sow the seeds of a reversal,” because tighter financial conditions will weigh on demand, increasing the likelihood that interest rates will peak and not pause, analysts at Rabobank said.
However, no one was placing big bets before the US non-farm payrolls data was published at 1230 GMT.
Economists polled by Reuters expect to show 170,000 US jobs (USNFAR=ECI) were added last month, although estimates range from 256,000.
“It’s hard to say where people are sitting, but the market definitely won’t want to see a strong number,” said Jason Wong, a strategist at BNZ Bank in Wellington.
Another round of bond selling is likely to push the dollar forward along what is already the longest streak of weekly gains on record against the euro. The dollar index has risen for 12 weeks in a row, matching a streak that lasted from July to October 2014.
The rally held the euro at $1.0542, near its lowest level in 11 months, and the pound is not far from its lowest level in seven months. The dollar index stabilized on Friday at 106.4.
“A push through 107 would provide technical evidence of a continuation of the trend,” said Kyle Rodda, an analyst at Capital.com.
Surprisingly, only the beleaguered yen has shown much fight, since a sudden jump in the Japanese currency during the afternoon in London on Tuesday, fueling speculation that the authorities had intervened.
Japanese stock market data showed no anomalies of the kind that might accompany intervention. But the move was eye-catching enough to keep traders on their toes.
The yen settled in the latest trading at 148.5 to the dollar. Gold also settled at $1,822 an ounce after nine days of losses driven by rising global bond yields.
“This may just be a brief pause while we wait for labor market data, US Treasury supply data and the consumer price index next week,” said Kit Jukes, a strategist at Société Générale.
“If labor market data is strong, the pressure will return sooner than it did last year. I still think the Treasury market will take higher yields until something happens in the system.”
Tom Westbrook reports. Edited by Shri Navaratnam
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