Safe-haven assets are heating up, with US bonds and the Japanese yen rising, as the market awaits the non-farm payroll data
Against the backdrop of rising risk aversion, US Treasury yields and the USD/JPY exchange rate fluctuated. The latest data shows that both the 10-year and 2-year US Treasury yields fell by 1 basis point, while the Japanese yen rose to 143.52 against the US dollar. Investors are focusing on the upcoming release of non-farm payroll data and the possibility of a rate cut by the Federal Reserve to address the challenges of a slowing labor market. The performance in the Asia-Pacific markets varied, with the Nikkei 225 index opening 1.4% lower
As global risk aversion rises, investors are buying assets such as US Treasuries.
On Thursday, the impact of rising US Treasury yields spread to Asian markets, with the US dollar weakening and the Japanese yen strengthening. Investors are closely watching the upcoming non-farm payroll data and preparing for the Federal Reserve's interest rate cut later this month.
Yesterday, the yield on the 10-year US Treasury fell by 8 basis points, and the yield on the 2-year US Treasury even briefly fell below the 10-year yield. Due to the slowdown in the US labor market, Wall Street's bets on a Fed rate cut have increased, weakening the US Dollar Index and causing a sharp rise in the Japanese yen. In early trading on Thursday, the yen continued to rise, while Australian and New Zealand bonds followed the trend of US bonds.
After rising, the yen against the US dollar briefly rose to 143, and is now at 143.52.
As of now, the yield on the 10-year US Treasury and the 2-year US Treasury have both fallen by 1 basis point.
The trend of US Treasuries is partly influenced by the Job Openings and Labor Turnover Survey (JOLTS) data. On Wednesday, the US Bureau of Labor Statistics released a report showing that the number of job openings in the US in July was lower than market expectations, dropping to the lowest level since early 2021, with an increase in layoffs, consistent with other signs of a slowdown in labor market demand.
Chris Ragan of Morgan Stanley said:
"The market may not be as nervous as it was a month ago, but they are still looking for confirmation that the economy will not cool excessively. But so far, they have not found it."
The Fed will begin cutting interest rates in a few weeks, and the main question now is the magnitude of the first rate cut, with the US employment data to be released on Friday helping to determine the answer.
Last month's employment report raised concerns about growth, and Fed Chair Jerome Powell has made it clear that the Fed is now more concerned about risks in the labor market than inflation.
In addition, the Asia-Pacific markets opened mixed. The Nikkei 225 index opened 1.4% lower, the TOPIX index fell 1.2%, and the KOSPI in Seoul opened 0.7% higher