As long-term interest rates rise globally and weigh on stock prices, expectations for rate hikes in Japan and the US have temporarily eased. US economic data releases and FOMC-related developments will be in focus as market catalysts this week.
US long-term interest rates continued to rise throughout last week, with the 10-year Treasury yield briefly reaching 5.34%, its highest level since April 2002. Japanese long-term interest rates moved in a high range, while rising European long-term interest rates also weighed on equity markets. As a result, Japanese and US equity markets lacked clear direction.
The market strengthened its view that expectations for rate hikes in Japan and the US had eased, and long-term interest rates also declined in the latter half of the week. At the same time, the main views from the monetary policy meeting were taken as not supportive of a rate hike, raising the possibility that market direction could change depending on future policy decisions.
US September employment data showed nonfarm payrolls increasing by 29,000 month on month, below market expectations, supporting the view that the probability of a rate hike at the October meeting would decline. Ahead of the release of the FOMC minutes, the market is carefully assessing the outlook for interest rates.
This week, developments in the Middle East, oil prices and AI-related factors will influence the market. In Japan, attention will focus on the extraordinary session of the Diet and comments from the Bank of Japan governor, while concerns remain that higher long-term interest rates could affect the economy.