Next week brings a wave of US labour market data as inflation and economic overheating push Treasury yields to multi-decade highs. Thirty-year US Treasury yields surged to their highest since June 2004 after business activity accelerated in September at the fastest pace in five years. The 10-year yield rose to its highest since 2007, with Fed policymakers warning that higher rates may be needed to cool the economy.

The Fed raised rates last month to 3.75–4 per cent, with chair Kevin Warsh highlighting labour market strength. Economists expect 100,000 jobs added in September, down from 162,000 in August, with unemployment rising to 4.2 per cent. Bank of America forecasts only 60,000 jobs, easing pressure on the Fed.

Meanwhile, euro area inflation is expected to hit 3.5 per cent year-on-year in September, up from 3.2 per cent, driven partly by energy costs. The ECB raised rates to 2.5 per cent, with markets pricing in a 50 per cent chance of another rise next month. Morgan Stanley expects the next ECB move in December.

In Japan, the Bank of Japan’s Tankan survey will reveal how businesses cope with rising rates and inflation.