Asian shares come off 11-month lows as Treasuries rally
Asian shares rebounded from 11-month lows on Thursday as a plunge in oil prices and softer U.S. labour data helped pull Treasury yields off 16-year peaks, although a looming U.S. payrolls report could make or break the rally.
Tracking overnight gains on Wall Street, MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6%. Japan's Nikkei climbed 1.2%.
Hong Kong's Hang Seng index advanced 0.3%.
China's mainland markets remain closed for holidays.
Overnight, the rout in Treasuries took a breather after a cooler-than-expected U.S. private payrolls report and a 5% drop in oil prices offered some comfort to investors.
Risk sentiment has taken a beating on the view that interest rates will stay high for longer.
Ten-year yields eased 2 basis points to 4.7163% on Thursday, continuing their overnight retreat from a fresh 16-year high of 4.8840%.
Much will depend on U.S. non-farm payrolls data on Friday. Economists expect 170,000 jobs created in September, slowing from 187,000 in August, while the jobless rate likely ticked lower to 3.7% from 3.8%.
«I think those numbers will have to be a long way from those expectations for it to move the dial for the Fed, but numbers close to the expectations might serve to calm jitters in the Treasury market,» said Stephen Miller, an investment strategist at GSFM, a Sydney-based fund.
«Given where Treasury yields are at the moment, I think the risks are pretty evenly balanced between them on the downside and on the upside.»
The recent spike in yields has meant they have reached levels where, if sustained, would see a significant tightening in financial conditions, bolstering the case for no further hikes from the Fed. The CME FedTool now prices in a 23% chance of a hike in
