Investors started Thursday with a cautious tone across Asian markets, as bond yields remained anchored at multi‑year highs despite a slower‑than‑expected rise in U.S. inflation for August. The modest dip in inflation, coupled with a downward revision to July’s figure, trimmed some expectations of a Federal Reserve rate hike this month.

U.S. inflation and Treasury yields

Data released on Friday showed consumer price growth in August easing below analysts’ forecasts, while July’s reading was revised lower. The news reduced bets that the Fed would raise rates again in September, a development welcomed by many market participants.

Nevertheless, the relief was short‑lived for bond markets. U.S. Treasury yields surged to fresh overnight peaks and held near those levels during Asian trading. The persistence of high yields reflects lingering concerns about inflationary pressures and the Fed’s future policy path.

International backdrop

Outside the United States, the stalled peace talks between the United States and Iran have done little to improve the global inflation outlook. The euro zone, in particular, is feeling the strain as price growth outpaced expectations in several of its largest economies last month.

In Japan, a quarterly BOJ Tankan survey revealed that business confidence rose to an eight‑year high for the July‑September period, even as firms reported elevated inflation expectations. The survey’s findings bolster the case for additional interest‑rate hikes by the Bank of Japan.

Further insight from the BOJ’s September meeting summary showed that some policymakers see a need to accelerate the pace of tightening or move rates closer to the central bank’s target sooner rather than later.

Equity markets and corporate news

Equity markets in Asia remained subdued. Micron Technology, a leading AI chipmaker, posted blockbuster earnings that failed to lift overall sentiment. The company forecast quarterly revenue above estimates and noted that customers increased commitments under long‑term supply agreements to $32 billion, underscoring continued demand for AI memory chips.

Despite Micron’s strong performance, trading volumes were thin as markets in Hong Kong and mainland China were closed for a holiday.

Key data points to watch

• UK nationwide house price data for September
• France and Germany S&P manufacturing PMI for September
• Euro zone unemployment rate for August

These indicators could shape market direction later in the day.

Outlook

While the recent slowdown in U.S. inflation offers a glimmer of hope for a more dovish Federal Reserve stance, the persistence of high Treasury yields and ongoing geopolitical tensions suggest that bond markets will remain under pressure. Investors will be watching upcoming economic releases and central‑bank communications for clues on the trajectory of monetary policy worldwide.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.