Equities and bonds staged a relief rally across Asia while the yen held firm, as traders positioned for pivotal U.S. data and Federal Reserve commentary.
Shares and government bonds rallied broadly across Asia on Thursday, Sept. 3, 2026, in Tokyo trading, while the Japanese yen held onto a sharp overnight gain, as investors awaited fresh U.S. economic data and Federal Reserve commentary that could shape the central bank's next rate decision, according to Reuters. The MSCI Asia-Pacific ex-Japan index rose about 0.5% early in the session, building on modest gains in U.S. markets the previous day.
Bond Markets Ease After Selloff
The rally followed a bruising stretch for fixed income, during which Japan's benchmark 10-year government bond yield hit 3% on Tuesday, Sept. 1, for the first time since September 1996, driven by inflation concerns and fiscal worries, Reuters reported. Yields eased Thursday after a well-received 30-year JGB auction, while the U.S. 10-year Treasury yield also pulled back from recent highs, on track to snap its longest daily winning streak since March, per Reuters' Wednesday, Sept. 2 market wrap. On Wall Street that same session, the Dow rose 0.56%, the S&P 500 gained 0.46% and the Nasdaq added 0.45%, rebounding from a three-day slide tied to the bond rout and U.S.-Iran tensions.
Yen Jump Fuels Intervention Speculation
The yen was last trading around 158.88 per dollar, holding a 0.9% overnight jump that left traders on alert for possible official intervention or rate checks by Japanese authorities, Reuters reported. Carol Kong, currency strategist at Commonwealth Bank of Australia, told Reuters the move "was about 0.9% and it's not a big move, and I definitely don't think that was an intervention," while noting some market participants suspected rate checks. Kong linked broader positioning to Fed Chair Kevin Warsh's hawkish Jackson Hole speech. Separately, Bank of Japan Governor Kazuo Ueda said Sept. 1 the BOJ would debate raising rates in September, citing inflation risks.
Fed funds futures now imply roughly a two-in-three chance of a 25-basis-point rate hike this month, up from about 37% a week earlier, according to Reuters. Investors are awaiting the U.S. jobs report and further Fed commentary to confirm the outlook, with analysts cautioning the rally reflects short-term positioning rather than a fundamental shift in market conditions.
