Asia Stocks Rise for First Time in Three Days; Bonds Stabilize Ahead of Key U.S. Inflation Data

Asian equities posted their first gain in three days, while bond markets steadied after heavy sell-offs, as traders awaited critical U.S. inflation data for clues on the interest-rate path. The U.S. dollar is on track for its best monthly performance since June.

The MSCI Asia Pacific Index climbed 0.8%, led by technology stocks following strength in key U.S. semiconductor gauges. Sources familiar with the matter said AI startup OpenAI plans to raise at least $30 billion in fresh capital at a valuation of $1.4 trillion. SoftBank Group Corp., an investor in OpenAI, saw its shares jump 6%.

Bond markets remained in focus after the longest-maturity U.S. Treasury yields hit their highest level since 2002 during New York trading hours. The benchmark 10-year Treasury yield stabilized in Asian trading, having fallen earlier this week. Prior to that, rising oil prices prompted traders to price in expectations of further Federal Reserve rate hikes.

Brent crude recovered some of Tuesday’s losses, rising 0.9% to around $103.50 per barrel. Oil fell in the previous session amid reports Saudi Arabia had restored roughly half the capacity of its East-West Pipeline, which was damaged in a drone attack. The Trump administration also ordered another release from emergency oil reserves.

Oil prices and U.S.-Iran tensions remain major sources of uncertainty. After a string of conflicting signals in recent days, markets are looking for clearer signs of progress in negotiations. Persistently high energy costs risk sustaining inflation and reinforcing bets on additional Fed tightening, pushing global bond yields to multi-year highs.

On Tuesday, yields on the longest-dated U.S. Treasury securities rose for a sixth consecutive session, as investors demanded higher compensation for holding bonds amid concerns over persistent inflation, government spending, and surging corporate borrowing to fund artificial intelligence investments.

Traders are ramping up bets that U.S. Treasury yields will keep climbing from near two-decade highs, raising the risk of abrupt unwinding of these positions if the economy shows clear signs of cooling. Money markets are pricing in a series of rate increases over the next year.

Meanwhile, China rolled out mortgage subsidies and adjusted bank lending policies to step up support for its slowing economic growth.

Across other asset classes, gold edged lower to $4,175 per ounce. U.S. stock futures gained 0.1%.

The U.S. Dollar Index steadied on Wednesday, poised for its strongest monthly showing since June, as the Fed’s renewed focus on taming inflation lifted rate expectations and U.S. Treasury yields. The yen strengthened against the U.S. dollar to around 156.80.

At the same time, New York Fed President John Williams stated that another rate hike later this year could help bring inflation down. He added, however, that there is no urgent need for immediate action given the central bank already raised rates earlier this month.

Other policymakers are also weighing the possibility of further tightening. Fed Governor Michael Barr reiterated his warning that more rate increases may be required to curb inflation, while Chicago Fed President Austan Goolsbee said the central bank must address supply shocks.

Beyond Fed officials’ remarks, investors digested data showing U.S. consumer confidence fell in September to its lowest level since 2014, driven by deteriorating views on the economy and labor market. Job openings declined in August, signaling softer hiring demand, though layoffs remained low.

The next key data release is the Personal Consumption Expenditures (PCE) index due Wednesday from the U.S. Bureau of Economic Analysis, the Fed’s preferred inflation gauge. Economic research forecasts the August personal income and spending report will show a month-on-month acceleration in both headline and core inflation.

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