Asian stocks and bonds tumbled Monday, extending global market declines triggered by robust US payroll data that slashed expectations for Federal Reserve rate cuts.
The MSCI Asia Pacific Index fell 1.1%, with Chinese, Hong Kong, and South Korean markets leading losses.
European and US equity futures also signaled further declines.
The dollar hit a two-year high, while Brent crude surged above $81 a barrel, fueled by aggressive US sanctions on Russia’s oil industry, raising inflation worries.
Meanwhile, the British pound slid to its weakest level since November 2023, reflecting concerns over the UK’s economic challenges, including twin deficits.
US Treasury yields climbed, with the 30-year yield breaching 5%, and traders now eye inflation data due Wednesday for further clues on Fed policy.
Analysts at Bank of America and Goldman Sachs revised their rate cut expectations, signaling the potential for a hike instead.
Treasuries Selloff Sparks Global Market Reactions
US Treasury Yields Surge
- Benchmark 10-year yield rose to 4.80%, the highest since November 2023.
- 30-year yields are approaching 5%, continuing the selloff momentum from Friday.
Fed Rate Cut Expectations Fizzle
- Money markets now price in less than one rate cut for 2025.
- Persistent inflation and resilient economic data keep rate hikes on the table.
Blowout Jobs Data Drives Market Sentiment
- US non-farm payrolls jumped by 256,000 in December, surpassing expectations.
- Strength in the labor market casts doubt on immediate Fed easing.
Dollar Dominance Intensifies
- Bloomberg Dollar Spot Index hit a two-year high, reflecting the greenback’s strength.
- The pound fell to a 1-year low, and the offshore yuan neared record lows.
Global Ripple Effects
- European bonds face pressure as US Treasury moves reshape global fixed-income markets.
- UK assets remain at the center of global repricing concerns.
Eyes on Inflation Data This Week
- US Producer Price Index (PPI) and Consumer Price Index (CPI) reports will be crucial.
- Investors fear a narrative shift from rate cuts to potential rate hikes.
What’s next?
- The recent Treasury selloff underscores the ongoing tension between market expectations and economic realities. While robust job growth highlights the resilience of the U.S. economy, it complicates the Federal Reserve’s path toward potential rate cuts.
- The surge in Treasury yields reflects growing investor concerns about inflation and government debt levels, while the dollar’s strength adds pressure on global markets.
- This week’s inflation data will be critical in shaping the monetary policy outlook, as it may either reinforce the need for caution or reignite hopes for easing. It’s a pivotal moment for policymakers and investors alike.

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