Soft US employment data has eased pressure for further Federal Reserve rate hikes, lifting risk sentiment and pointing to a higher open for Asian equities. Brent crude advanced amid reports that Yemen launched a counteroffensive to retake areas controlled by the Houthi forces.

Stock index futures for Japan, South Korea and Chinese Taipei all signal gains. Nasdaq 100 futures rose 0.2% after closing at a record high last Friday, while S&P 500 futures edged higher in early Asian trading on Monday.

In early Monday trade, December-dated Brent crude futures broke above $103 per barrel, following a nearly 5% gain in the prior week. The oil price climbed even though major OPEC+ producers agreed to keep their oil production quotas unchanged next month. Gold steadied after rebounding from its sharpest weekly drop since June.

Equities are poised to extend gains, buoyed by Wall Street’s rally last Friday. The rally came after data showed US job additions in September fell short of economist estimates and wage growth cooled. While money markets now price in less than a 25% chance of a Fed rate hike in October, the bond market remains under strain.

US nonfarm payrolls rose by just 29,000 in the previous month, with downward revisions to the figures for the prior two months. The reading missed all economist forecasts in the survey. The unemployment rate climbed to 4.2%, partly due to labour force expansion.

Though the disappointing jobs report triggered a brief rebound in US Treasuries, the bond market remains mired in a months-long selloff. Investors are worried about persistent inflation, government spending and surging corporate borrowing to fund AI-related investments. The 10-year Treasury yield hit its highest level since 2002 last week.

This week’s auctions of 10-year and 30-year US Treasuries will test investor demand for long-dated bonds. The Federal Reserve will also release the minutes of its September policy meeting on Wednesday, which may reveal policymakers’ concerns over underlying price trends and inflation expectations.

Elsewhere, investors are watching for signs of contagion in European government bond markets, where the recent selloff has evoked memories of the region’s debt crisis 15 years ago. Brazilian assets are in focus as vote counting continues following Sunday’s presidential election.

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