(Reuters) – A look at the day ahead in Asian markets from Alden Bentley, Americas Breaking News Editor for Finance & Markets
Asian markets will have to wait over the weekend to trade on U.S. employment data for December, the first major global economic release of 2024, which will be released after markets close on Friday.
But if subdued US trading on Thursday is any indication, investors will be content to keep their powder dry on Friday. Wall Street tried to recover from its two-day selloff, with the Dow rising for the second time this week. But there was no obvious trend to resume the buying spree in late 2023, while Treasuries trended toward risk aversion, although not enough to push benchmark yields well above 4.0%.
That supported the dollar, particularly against the yen, which also faced a Nikkei selloff, an earthquake and a fatal plane accident on the first day after the holiday break.
Against the yen JPY=, the greenback rose to two-week highs and climbed for three days in a row. The dollar was last up 0.9% at 144.52 yen.
It rose to 7.1776 against the Chinese yuan, reaching its highest price since December 13 in US trading. The Australian dollar fell to its lowest price since December 18.
Thursday's ADP National Employment Report showed that U.S. private employers hired more workers than expected in December. Other reports showed a slowdown in the labor market. The question for financial markets is whether Friday's nonfarm payrolls release confirms current futures bets for five or more interest rate cuts from the Fed starting in March.
The yield on the 10-year Treasury note US10YT=RR rose 8.8 basis points to 3.995%. Its yield, which moves in the opposite direction of prices, briefly traded above 4% on Wednesday but has failed to maintain that level since falling below 4% in mid-December. Yields on the 10-year benchmark bond rose about 15 basis points in the first three trading days of the new year.
“The market is getting ahead of itself and not listening to what the Fed is saying,” said Judith Raneri, portfolio manager at Gabelli Funds.
The story goes on
The 10-year Treasury yield rose 8.8 basis points to 3.995%. It took a few half-hearted attempts to break 4% this week, but has failed to maintain that level since falling below that level in mid-December.
What that means for JGBs and other Asian government bonds today is not entirely clear, but Japanese yields rose in lockstep with government bonds on Thursday following the extended market holiday.
In a related statement, Citigroup said it plans to open its investment banking unit in China with about 30 employees as early as the end of this year.
Here are key developments that could give markets more direction on Friday:
– Consumer confidence in Japan (December)
– U.S. Nonfarm Payrolls and Unemployment (December)
(Reporting by Alden Bentley, additional reporting by David Randall)
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