Global equities rose for a third consecutive session, with Asian assets broadly stronger, as dovish comments from Federal Reserve officials led markets to reprice interest rate expectations.

Fed Governor Christopher Waller indicated he would support holding interest rates steady if inflation continues to ease, a statement that significantly reduced market bets on a September rate hike. Swaps markets now price a roughly 50% probability of a 25-basis-point hike in September, down sharply from about 70% earlier this week. The U.S. dollar stabilized after touching a four-month low, while Treasuries and gold maintained their upward momentum.

Where the action is

Asian markets benefited broadly across the board. The MSCI Asia Pacific Index climbed 0.8%, lifting the broadest global equity benchmark—the MSCI All-Country World Index—to a third straight day of gains. South Korea’s KOSPI closed 1.64% higher at 6,687.21, while the Korean won hit its strongest level since July 1, 2025. Japan’s super-long bond yields also fell noticeably, with both 20-year and 30-year tenors dropping about 10 basis points.

Japan’s Nikkei 225 closed up 1.3% at 65,020.94, and the broader TOPIX Index edged 0.03% higher to 4,103.23. The dollar traded around 156.28 against the yen, after touching as strong as 155.30 the previous session. The U.S. 10-year Treasury yield held steady at 4.76%. Japan’s 10-year yield declined 6.5 basis points to 2.900%.

Brent crude rose modestly to around $95.65 per barrel, on track for its biggest weekly gain since July, while West Texas Intermediate added 0.4% to $91.68 per barrel. Spot gold slipped below $4,460 per ounce, down 0.3% on the day, and bitcoin fell 0.5% to $81,079.42.

Bond markets react first to shifting rate outlook

Earlier this week, climbing oil prices combined with Fed Chair Warsh’s hawkish stance pushed global yields to multi-decade highs and triggered a heavy selloff in bonds. Waller’s comments reversed that dynamic, providing simultaneous support for both stocks and bonds.

Waller said he would be willing to support "maintaining the current policy rate" if inflation continues moving toward the Fed’s 2% target. The personal consumption expenditures price index—the Fed’s preferred inflation gauge—came in at 3.7% in July, down from 4.1% in May but still well above target.

Market attention now shifts to Friday’s nonfarm payrolls report. Suresh Tantia, chief investment officer for Asian equity strategy at UBS Global Wealth Management, told Bloomberg TV that Waller’s comments were "very significant because they may have changed or adjusted the balance on the Fed’s next policy decision." He emphasized that payrolls and the next inflation reading will be decisive in determining whether the Fed acts at its upcoming meeting.

Yen strength fuels BOJ hike bets

The yen’s movement was another focal point in Asian markets. The Japanese currency appreciated about 2% on Thursday, reclaiming losses accumulated over the previous month. As of reporting, the dollar traded around 156.28 against the yen, after touching as strong as 155.30 the prior session.

Market participants have further increased their bets on a Bank of Japan rate hike, while closely monitoring the risk of additional intervention by Japanese authorities to support the currency. Yujiro Goto of Nomura Securities argued that a 25-basis-point rate increase by the BOJ in September is justified, with further tightening possible thereafter.

Japan’s super-long bond yields fell in tandem, with the 20-year yield dropping 10 basis points to 3.715% and the 30-year yield shedding 10 basis points to 3.975%, reflecting a broader reassessment of global central bank policy expectations.

Oil stays elevated, uncertainty persists

Elsewhere, Brent crude inched higher to around $95.65 per barrel, poised for its largest weekly gain since July. Renewed U.S.-Iran tensions have intensified concerns about sustained disruptions to energy flows through the Strait of Hormuz, underpinning oil prices.

Nasdaq 100 futures rose 0.2%, and European equities pointed to a modestly higher open. Bitcoin hovered near $81,000, while the rate-sensitive two-year Treasury yield stabilized at 4.34% after declining the previous session.

Aidan Yao, senior investment strategist at AXA Investment Management, told Bloomberg TV that with roughly two weeks until the Fed meeting and about two months until the U.S. midterm elections, markets face considerable uncertainty. "My personal view is that downside risks may slightly outweigh upside potential, so I think it’s worth maintaining a cautious posture."

Additionally, this week’s bond selloff reflects deeper structural pressures: years of large-scale government spending, persistent price pressures, and a wave of corporate borrowing to finance artificial intelligence buildouts have all led investors to demand higher returns for holding debt.