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(Bloomberg) — Stocks in Asia are set to rise as a further US labor-market slowdown reinforced speculation the Federal Reserve will be able to cut interest rates next year to prevent a recession, spurring Treasuries to resume their rally.

Australia’s equity benchmark rose and futures pointed to gains in Japan and Hong Kong after the S&P 500 closed little changed. Benchmark US 10-year yields that briefly topped 5% in October broke below 4.2% on Tuesday, following data showing job openings hit the lowest since 2021. Australian bonds surged in early trading.

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The Job Openings and Labor Turnover Survey — known as JOLTS — trailed all estimates in a Bloomberg survey of economists. The data came a few days before the key payrolls report — currently forecast to show employers added 187,000 jobs in November.

“Overall, the jobs update is in the driver’s seat,” said Ian Lyngen at BMO Capital Markets. “Treasuries extended the bullish price action. From here, there isn’t much on the macro horizon until tomorrow’s ADP report.”

In China, the benchmark CSI 300 index tumbled almost 2% on Tuesday to close at the lowest since February 2019, after Moody’s Investors Service cut its outlook for the nation’s sovereign bonds to negative. Futures contracts point to further losses on Wednesday.

Treasuries also joined an advance in global bonds after one of the European Central Bank’s most-hawkish officials said inflation is showing a “remarkable” slowdown. That led investors to bet that Europe will lead the world’s largest central banks on interest-rate cuts. Crude fell for a fifth day on Wednesday while Bitcoin rose a seventh day to trade above $44,000.

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Swap contracts that anticipate the outcome of Fed meetings slightly increased the degree of easing they foresee by the end of 2024, with the effective fed funds rate expected to fall to about 4.05% from 5.33% currently.

Read: El-Erian Says Fed Risks Losing Control of Messaging on US Rates

Stepping Back

BlackRock Inc. says market optimism over the scope of rate cuts next year may be going too far and recommends stepping back from longer-maturity bonds.

“We see the risk of these hopes being disappointed,” strategists including Wei Li and Alex Brazier wrote. “Higher rates and greater volatility define the new regime.”

Read: Wall Street CEOs March to Washington With Capital-Rule Concerns

Meantime, the cost of buying protection against currency swings is jumping as traders brace for a slew of data and central bank meetings that could shed light on the timing of a possible pivot to rate cuts next year. 

A Bloomberg gauge of the greenback climbed for a second session on Tuesday, while the Australian dollar led losses among G-10 peers after a less-than-hawkish statement from the Royal Bank of Australia. The Japanese yen outperformed peers. 

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In other markets, spot gold fell further after hitting an all-time high on Monday. US benchmark crude futures dropped to a fresh five-month low as traders remain unconvinced that new OPEC+ export curbs will materially tighten the market.

Key events this week:

• Eurozone retail sales, Wednesday
• Germany factory orders, Wednesday
• US ADP private payrolls, trade balance, Wednesday
• CEOs of the biggest banks on Wall Street, including JPMorgan, Citigroup, Goldman Sachs, Morgan Stanley and Bank of America, expected to testify on regulatory oversight to the Senate banking committee, Wednesday
• Bank of Canada monetary policy meeting, Wednesday
• Bank of England issues biannual stability report on UK financial system, holds news conference, Wednesday
• China trade, forex reserves, Thursday
• Eurozone GDP, Thursday
• Germany industrial production, Thursday
• US wholesale inventories, initial jobless claims, Thursday
• Germany CPI, Friday
• Japan household spending, GDP, Friday
• Reserve Bank of Australia’s head of financial stability Andrea Brischetto speaks at Sydney Banking and Financial Stability conference, Friday
• US jobs report, University of Michigan consumer sentiment, Friday

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Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 8:27 a.m. Tokyo time. The S&P 500 was little changed.
• Nasdaq 100 futures were little changed. The Nasdaq 100 rose 0.2%
• Australia’s S&P/ASX 200 rose 0.5%
• Hang Seng futures rose 0.2%
• Nikkei 225 futures rose 0.4%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%
• The euro was little changed at $1.0793
• The Japanese yen was little changed at 147.17 per dollar
• The offshore yuan was little changed at 7.1728 per dollar
• The Australian dollar was unchanged at $0.6552

Cryptocurrencies

• Bitcoin rose 0.4% to $44,074.78
• Ether rose 0.6% to $2,287.5

Bonds

• Australia’s 10-year yield declined 12 basis points to 4.29%

Commodities

• West Texas Intermediate crude fell 0.2% to $72.14 a barrel
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

—With assistance from Rita Nazareth.

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