Asian equities and bond markets declined amid surging oil prices, as investors await key U.S. inflation data due later Friday, which could determine whether the Federal Reserve will raise interest rates this month.
The MSCI Asia-Pacific Index fell 1.9%, poised for its largest single-day drop in three weeks. Brent crude rose 0.6% to $108.24 per barrel, after briefly approaching $110. The U.S. Treasury’s bond buyback volume came in below investor expectations, further weighing on bond prices, pushing the 10-year Treasury yield close to 5%.
Patrick Garvey, head of Americas research at ING, said: “A 10-year U.S. Treasury yield reaching 5% looks more like an inevitability than a forecast. This is a worrying period for bond markets.”
Iran-backed Houthi rebels advanced along the coast of the Bab al-Mandeb Strait, making progress in their attempt to seize Mocha near the southern end of the Red Sea.
Warren Patterson, head of commodity strategy at ING, noted: “Rising oil prices will remain a concern ahead of the midterm elections. For oil to surge significantly, we would need to see a further escalation that disrupts oil shipping through the Strait of Hormuz again.”
The U.S. consumer price index (CPI) report due Friday will be a crucial barometer of market risk sentiment, with investors closely watching whether rising energy costs spill over into broader price pressures.
Tonight’s release of August CPI data is expected to show the U.S. CPI holding steady at 3.4%, while core CPI may even dip slightly to 2.4%. With overnight PPI slightly exceeding expectations and the Red Sea tensions heating up, market tolerance for any CPI surprise has dropped to zero—any outcome above forecasts could weigh on gold and the Nasdaq.
Plugin Case Examples
Gold: 4,300 is currently the critical pivot point between bullish and bearish momentum. If it holds firm and rebounds, potential targets include 4,330, 4,350, and 4,380; if it continues to break lower, the next targets are 4,220/4,200. Tonight’s CPI release will serve as a key catalyst. Before the data, if there is a short-term rebound following a cleanup of near-term liquidity, light positions can be considered for a brief trade, but exit quickly with protective stops.
(Gold 15-minute chart)
Nasdaq: Watch for a rebound signal after near-term liquidity consolidation around 29,000. Light positions may be considered during daytime trading. Then wait for further guidance from tonight’s CPI data. However, if positions are entered during the day, ensure timely reduction to protect capital.
(Nasdaq 15-minute chart)
Crude Oil: Prices have broken above the 100 level, maintaining strong short-term bullish momentum. We recommend staying cautious. If monitoring during the day, consider light entries based on breakout signals from consolidation patterns. However, reduce positions before the CPI data release.
(Crude Oil 15-minute chart)
Today’s Key Financial Data and Events:
20:30 August CPI
