Overnight
US Treasury yields stabilised near 20-year highs as global markets digest mixed inflation-versus-growth signals. The 10-year yield held around 5.2%, with overnight moves reflecting Fed officials' commentary signalling a likely pause in rate hikes. Two-year yields remain elevated, anchoring carry-trade expectations at current policy settings. Gilt and Bund futures tracked the US move, though European traders await fresh economic data later in the week that could reset rate expectations.
Asia and Europe
Hong Kong trade opens to light volumes during the Golden Week break; Mainland visitation expected to reach 1.3 million travellers through October 7. Mainland equity indices are awaiting fresh macro data due later this week; the Hang Seng held near 24,600 in overnight trade. Singapore property saw modest inflows ahead of the holiday period. European opens will track overnight US technicals; both ECB and BOE officials offered cautious guidance this week, suggesting both central banks are in pause-and-watch mode rather than signalling further tightening. Bank of Japan's September meeting summary (released this week) documented hawkish commentary from multiple board members on early tightening, providing a meaningful counterpoint to Western pause narratives and complicating the global rate picture.
FX, rates and commodities
The yen drifted modestly against a mixed basket as BOJ tightening expectations factored into positioning. Euro held steady near 1.13 as traders weighed ECB pivot signals and forward guidance. Oil and commodities traced risk sentiment broadly; gold remained supported by safe-haven demand amid rate uncertainty. Copper awaited fresh China PMI data, expected later in the week. Dollar strength persisted as rates remained elevated.
The day ahead
Asian markets remain half-staffed for the National Week break through October 7. Mainland policy signals and US jobless-claims data (due later in the session) will be critical to resetting rate expectations. US Treasuries will track Fed communications closely ahead of the 27–28 October FOMC decision. Money markets are pricing in roughly 30% probability of a hold.
One number
5.243%—the US 10-year yield, holding just shy of 2004 peaks as bond volatility has settled but duration remains unattractive at current risk premium levels. Every 0.1% move translates to meaningful economic consequences for borrowers globally.
One read
The Financial Times market report for October 1 captures the central tension: Fed speakers shifted from rate-hike talk to "patience and data dependency," yet core inflation readings and wage data still worry inflation hawks. That contradiction, playing out over the next three weeks into FOMC, will drive volatility across fixed income and currency markets.
