Asian stocks and bonds were set to decline Thursday, tracking Wall Street losses as an oil rally and stronger-than-expected US economic data fueled inflation concerns and bets on further interest-rate hikes. The yen, near a three-week low, will be in focus as Japanese markets reopen. New Zealand government bonds fell in early Asian trading, while Australian bond futures pointed to losses, following the selloff in Treasuries. Equity-index futures for Hong Kong and Australia pointed lower, with US equity futures little changed after the S&P 500 fell 0.8% and the Nasdaq 100 dropped 0.9% on Wednesday. South Korean markets were closed.

US oil rose in early trading after Brent crude jumped 3.9% to settle at $103.08 a barrel. On Wednesday, 10-year Treasury yields surged 15 basis points to 5.11%, the biggest one-day increase since the market turmoil triggered by President Donald Trump’s April 2025 tariff rollout. The selloff deepened after a weak $70 billion sale of five-year notes, pushing the yield above 5% for the first time since 2007, while the dollar strengthened against all major currencies.

The prospect of higher energy costs colliding with a still-strong US economy is likely to keep pressure on bonds and equities as investors reassess how far the Fed may need to tighten policy. Traders have ramped up bets on further rate hikes, placing upcoming inflation and labor-market data firmly in the spotlight. “This is the market telling us we’ve entered a genuine re-tightening cycle,” said Tony Miano at Wells Fargo Investment Institute.

Earlier, data showed US mortgage rates climbed to a more than two-year high, while the S&P Global flash US composite purchasing managers index rose in September to its highest since July 2021. Officials raised borrowing costs last week for the first time in three years, to a range of 3.75% to 4%, a move Chairman Kevin Warsh said removed a “dose of accommodation.” Swaps now fully reflect three quarter-point hikes over the next year, with significant hedging for a fourth.