By Tom Westbrook
SINGAPORE (Reuters) – A lull in bond selling stretched into Asia trade on 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.
Sliding oil prices have also provided some relief to markets, with Brent crude futures at $84.50 a barrel, some $13 or 13.5% cheaper than last week’s 11-month high. [O/R]
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8%. Tokyo’s Nikkei was flat and currency markets were similarly steady with the dollar just off recent highs as traders looked to the labour data for guidance.
U.S. economic data has been mixed lately, though markets have been especially wary that signs of resilience could justify holding rates elevated for longer or even hiking interest rates, and 10-year U.S. Treasury yields are up 55 basis points in five weeks.
Economists polled by Reuters’ expect 170,000 U.S. jobs were added last month, and that the unemployment rate ticked lower to 3.7%.
“It’s hard to disentangle where people are sitting, but the market won’t want to see a strong (payrolls) number for sure,” said Jason Wong, strategist at BNZ in Wellington.
That would probably unleash another round of bond selling and send the dollar higher thanks to both rising yields and the safety factor of holding greenbacks.
The dollar’s 12-week run of gains against the euro is a record and has the common currency, at $1.0542, pinned close to an 11-month low. The dollar index is set to equal a record 12-week winning streak it made in 2014.
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 been expected were there a large purchase of yen, suggesting there was no direct intervention in spot trade. But the move was eye-catching enough to keep traders on their guard.
The yen was last steady at 148.5 per dollar.
Ten-year Treasury yields held at 4.72%. Gold was also steady at $1,822 an ounce after nine days of losses driven by rising global bond yields. [GOL/]
“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.”
(Reporting by Tom Westbrook; Editing by Shri Navaratnam)
