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Asian stock markets: https://tmsnrt.rs/2zpUAr4

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S&P 500 futures edged down before US CPI, earnings

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Dollar holds firm, trading thin with Tokyo off

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Treasury yields near 14-mth top, Fed easing scaled back

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Oil jumps to 4-mth high as Russia supply crimped

By Wayne Cole

SYDNEY, Jan 13 (Reuters) - Asian shares slipped on

Monday while the dollar held near 14-month peaks after an

unambiguously strong payrolls report shoved up bond yields and

tested lofty equity valuations just as the earnings season gets

under way.

The impact of the jobs report on U.S. rate cut prospects

also raised the stakes for consumer price figures on Wednesday

where any rise in the core greater than the forecast 0.2% would

threaten to close the door on easing altogether.

Not helping, was a spike in oil prices to four-month highs

amid signs of weaker crude shipments from Russia as Washington

stepped up sanctions on the country.

Markets have already scaled back expectations for Federal

Reserve rate cuts to just 27 basis points for all of 2025, with

the terminal level now seen around 4.0% compared to the 3.0%

many had hoped for this time last year.

"Given such strong data, we now expect the Fed to cut rates

only once this year, by 25bp in June," said Christian Keller,

head of economic research at Barclays.

"We still expect the FOMC to proceed with a cut in June, as

we expect the economy to slow in coming quarters and inflation

to continue to decline in H1, before tariffs lead to some

firming in inflation in H2."

At least five Fed officials are on the docket to speak this

week and offer their reaction to the jobs surprise, with the

influential Federal Reserve Bank of New York President John

Williams appearing on Wednesday.

The hawkish turn on rates lifted yields on 10-year

Treasuries to 14-month peaks of 4.79%, and they were

last trading at 4.764% in Asia.

Higher yields on risk free bonds raise the discounting bar

for corporate earnings and make debt relatively more attractive

compared to equities, cash, property and commodities.

They also raise borrowing costs for businesses and

consumers, and that is before President-elect Donald Trump's

proposed tariffs inflate import prices.

This could test the optimism around corporate earnings as

the season kicks off with the major banks on Wednesday,

including Citigroup, Goldman Sachs and JPMorgan.

BEARS EYE STERLING

A holiday in Japan made for thin early trading on Monday and

MSCI's broadest index of Asia-Pacific shares outside Japan

edged down 0.4%.

While the Nikkei was shut, futures traded

down at 38,770 compared to a cash close of 39,190.

South Korean stocks eased 0.2%, with the political

situation still in flux as a Constitutional Court hearing begin

on Tuesday to decide if impeached president, Yoon Suk Yeol, will

be removed from office or reinstated.

Over in China, trade figures for December are due later

Monday followed by data on gross domestic product, retail sales

and industrial output on Friday.

S&P 500 futures and Nasdaq futures were both

off 0.1%, following Friday's pullback.

The inexorable rise in Treasury yields has boosted the

dollar across the board and seen the euro fall for eight weeks

straight to huddle at $1.0240, just above its lowest

since November 2022.

The dollar was steady at 157.84 yen, though off a

six-month top of 158.88 amid reports the Bank of Japan might

revise up its inflation forecasts this month as a prelude to

hiking rates again.

Sterling was pinned near 14-month lows at $1.2202,

with sentiment soured by a recent rout in the gilt market on

concerns the Labour government would have to borrow more to fund

spending pledges.

British finance minister Rachel Reeves on Saturday vowed she

would act to ensure the government's fiscal rules were met.

Gold prices were holding firm at $2,688 an ounce,

having proven surprisingly resilient in the face of a stronger

dollar and higher bond yields.

Oil prices continued to climb on supply concerns as Russia's

seaborne exports hit their lowest since August 2023, even before

the latest round of U.S. sanctions.

Brent jumped $1.43 to $81.19 a barrel, while U.S.

crude surged $1.50 to $78.07 per barrel.