Rising oil prices and climbing bond yields tighten the market; nonfarm payroll and ISM data become key short-term variables

(1) U.S. stock index futures showed a lackluster performance as investors weighed the risks of further Federal Reserve rate hikes, U.S.-Iran tensions, and this week’s key employment data. Risk appetite remains constrained by multiple uncertainties. (2) Japan’s 10-year government bond yield has surpassed 3% for the first time since 1996, with the global bond sell-off further spreading to major markets. Equity asset valuations are facing systemic repricing pressures caused by rising risk-free rates. (3) Brent crude oil has risen above $91. The U.S. threat of further action against Iran has intensified concerns over potential supply disruptions in the Strait of Hormuz. Persistently high energy prices could further reinforce sticky inflation and reduce the room for central banks to shift to dovish policies. (4) U.S. labor market and manufacturing data will be released this week. If employment remains resilient and wage growth does not slow, combined with inflationary pressures driven by energy prices, the probability of a Federal Reserve rate hike in September may rise further. By then, expectations of tightening global liquidity will exert even greater pressure on risk assets.