European stock futures edged lower as traders positioned ahead of the data on Eurozone CPI and US job openings to gauge the central banks’ upcoming rate decisions.

Contracts on the Euro Stoxx 50 Index declined 0.1 percent even as Asian shares increased, led by gains in Japan and Hong Kong, Bloomberg reported on Tuesday. The MSCI AC Asia Pacific Index hit its highest since late May amid a rally in Hong Kong-listed property and electric vehicle maker shares.

U.S bonds, dollar gain

The 10-year Treasury yields pared some of the seven basis points gain on Monday, when the benchmark had approached 4.5 percent on speculation that a Trump presidency would lead to greater US fiscal deficits and higher inflation. That further drove the dollar’s gains, as the greenback strengthened against all of its Group-of-10 peers.

“The dollar is being supported by the jump in US Treasury yields overnight,” David Forrester, a senior strategist at Credit Agricole CIB, said. “The irony is that it is investor concerns about US fiscal sustainability that is driving US Treasury yields higher.”

After last week’s debate hurt Biden’s chances of winning reelection, Wall Street strategists — including the ones from Goldman Sachs Group Inc. to Morgan Stanley and Barclays Plc. — are taking a fresh look at how a Trump victory could play out in the bond market and are urging clients to position for sticky inflation and higher long-term yields.

Asian markets

Back in Asia, a Japan equity benchmark inched closer to a record high, supported by financial stocks’ gains from the prospect of higher lending rates. Bank and insurance stocks in Japan were among the largest contributors to the Topix index’s gain, after domestic 10-year yields continued their rise above 1 percent on bets that the central bank will raise policy rates.

“Japan’s financials are strong with domestic 10-year yields approaching 1.1 percent,” said Sohei Takeuchi, a senior fund manager at Sumitomo Mitsui DS Asset Management Co. Japanese stocks may be seeing some global demand after generally lagging emerging and European markets, he said.

The prospect of a Bank of Japan interest rate hike coming later this month increased after an index showed confidence among the nation’s large manufacturers rose from three months earlier. Vanguard sees the yen at risk of falling toward 170 per dollar if potential BOJ policy changes this month fail to boost the country’s bond yields.

In China, pessimism about the domestic economy has sparked a surge in demand for government debt. The central bank said it will borrow government bonds from primary dealers, a sign it may be contemplating selling securities to cool down the rally.

The yield on China’s benchmark bonds fell to a record low on Monday as investors worry about the long-term economic growth.

European markets, commodities

In Europe, European Central Bank President Christine Lagarde signalled that there is not sufficient evidence that inflation threats have passed, feeding expectations that officials will take a break from cutting interest rates this month. The euro was little changed after French election results suggested there’s a smaller probability of extreme policies coming from the far-right.

In commodities, oil traded near a two-month high on escalating Middle East tensions and concerns over the Atlantic hurricane season as Beryl is named a category 5 hurricane. Elsewhere, gold was little changed.

Upcoming reports

Reuters reported that U.S. monetary policy will be in focus later in the day, when Federal Reserve Chair Jerome Powell speaks at an event in Sintra, Portugal hosted by the European Central Bank.

A parade of potentially crucial U.S. employment data begins on Tuesday with the JOLTS job openings report, a Fed favourite, followed by ADP numbers a day later and the all-important monthly payrolls figures on Friday.

An Associated Press report said this week’s economic highlight will likely arrive Friday, when the U.S. government will say how many workers employers hired during June. Economists predict overall hiring slowed to 190,000 from May’s 272,000. That would get the number closer to what Bank of America calls the “Goldilocks” figure of roughly 150,000, give or take 25,000.

At that level, the U.S. economy could continue to grow and avoid a recession without being so strong that it puts too much upward pressure on inflation.