Asian Bonds Fall as Treasury Yields Rise Amid Oil Price Surge
Asian government bonds fell on Tuesday as the 10-year Treasury yield rose to its highest level since January 2025, reaching 4.77%. This rise in yields fueled inflation concerns and expectations for further monetary tightening. The 10-year Japanese government bond yield also increased to 2.965%, hitting a three-decade high.
The surge in oil prices continued, with Brent crude extending gains to over $91 a barrel due to renewed fighting in the Middle East. This escalation of tensions has dimmed prospects for normalization of shipping through the Strait of Hormuz, keeping oil prices elevated and adding to inflation concerns.
Money markets have increased bets on a September interest-rate hike after Federal Reserve Chair Kevin Warsh's commitment to bring down inflation at Jackson Hole last week. The August US payrolls data is expected to be consistent with general steadiness in the labor market, helping the Fed focus more intently on its battle with inflation.
JPMorgan Chase & Co.'s Andrew Tyler shifted to a 'tactically cautious' view on US stocks for the next few weeks, but expects a strong backdrop will persist amid economic data and earnings. The yen traded near 160 versus the dollar, raising the risk that authorities may enter the market again to slow its decline.