(Reuters) - A look at the day ahead in Asian markets. 

Market sentiment in Asia will be fragile at best on Friday as high and rising bond yields sink their teeth into risky assets, and worries about escalating AI costs appear to slam the brakes on the megacap, Big Tech rally.

There probably won't be any positive spillover from Wall Street after the S&P and Nasdaq on Thursday posted their steepest one-day losses in two months.

However, shares in Amazon ( AMZN ) and Intel ( INTC ) rose sharply in after-hours trading following their earnings reports on Thursday, but Apple shares dipped. Traders will likely play it safe ahead of U.S. employment data on Friday and ahead of the weekend.

There's a sprinkling of potentially market-moving events in Asia on Friday, namely purchasing managers index reports from several countries including China, Indonesian inflation, and Japanese earnings from Mitsui ( MITSF ), Nomura, Mitsubishi ( MSBHF ) and others.

Perhaps more importantly though, the so-called 'bond vigilantes' are flexing their muscles again, pushing up yields across the developed world - with the possible exception of Canada - in an attempt to enforce some degree of discipline on what they consider fiscally lax governments.

A bearish narrative coalescing around three main facets - fiscal slippage, huge debt supply coming down the pike, and sticky inflation resulting from higher spending - is dominating bond market sentiment right now.

Yields are on the rise, with UK gilts feeling the heat most in the last 24 hours following Chancellor Rachel Reeves' debut budget on Wednesday. And on Thursday, the Bank of Japan kept rates on hold but left the door open to a near-term hike.

For markets in Asia, U.S. bonds are what matter most. And only days away from the U.S. presidential election the signs are flashing amber, if not red - implied volatility and the 'term premium' are the highest in a year, and the 10-year yield has risen more after the first cut in this Fed easing cycle than any since 1989.

If that wasn't bad enough for Asian markets, the dollar just clocked its biggest monthly rise in two and a half years. Most Asian stock markets lost ground in October and the MSCI Asia/Pacific ex-Japan index fell 4.5%.

Chinese stocks lost more than 3% in October, perhaps unsurprising given the previous month's 21% rise, while the weak yen has helped Japan's Nikkei 225 index post a monthly gain of around 3%.

Given the nervous global backdrop, however, it would not be a surprise to see Japanese stocks retreat on Friday, regardless of the exchange rate.

Asia's main data point on Friday is China's 'unofficial' manufacturing PMI. This follows the Bureau of Statistics PMI reports on Thursday that showed manufacturing activity crept back into expansion territory in October for the first time since April.

Here are key developments that could provide more direction to markets on Friday:

- Reaction to Apple, Amazon ( AMZN ) results

- China PMI (October)

- Indonesia inflation (October)