A look at the day ahead in European and global markets from Wayne Cole.

Why bother engineering a soft landing, when you can just keep flying?

That's the message from the U.S. payrolls report, which is likely to lift the Atlanta Fed GDP Now estimate from its already above-trend pace of 2.7%.

With the labour market so resilient and inflation receding only slowly, markets may be wondering why the Federal Reserve is easing policy at all. A reading above +0.2% for core consumer prices on Wednesday could convince futures to start giving up on even one cut this year.

The Treasury market is clearly fretting that cuts are done and the next move might be up, especially if President-elect Donald Trump goes through with universal tariffs, mass migrant deportations and tax cuts.

China's reveal of a whopping $105 billion trade surplus with the United States in December only adds ammunition to those arguing for swingeing tariffs.

Add in an ever-expanding budget deficit and it would be no surprise to see 10-year Treasury yields test the 5% barrier.

That raises the bar for discounting corporate earnings, just as the profit season starts with the big banks on Wednesday. It also makes risk-free debt relatively more attractive compared with other investments including equities, cash, property and commodities.

So it's been pretty much a sea of red in Asian stocks so far on Monday. Japan is on holiday but Nikkei futures are down around 1.2%. S&P 500 and Nasdaq futures are both down around 0.5%, and European stock futures have lost 0.1% to 0.3%. There's no trading of cash Treasuries but futures are down 5 ticks or so.

The ascent of yields is stoking the dollar's bull run and causing stress across Asia, where central banks have to routinely intervene to prop up their currencies.

China's central bank is increasingly rummaging through its policy tool kit to support the yuan, announcing on Monday an increase in the cap on what local companies can borrow abroad. If they can borrow the dollars they require, then there is less need to buy dollars for yuan in the spot market.

Another currency under fire is sterling, which hit a fresh 14-month low at $1.2138 as markets fret about the Labour government's financial credibility. On a trip to China, finance minister Rachel Reeves had to reassure the media she would act to ensure the government's fiscal rules are met.

Oh, and oil is up another 1.5% as investors ponder the full implications of the latest round of U.S. and UK sanctions on Russian producers.

This move could really bite since it sanctions another 160 tankers of Russia's shadow fleet, taking the total to 270. Previous tankers so hit were severely curtailed in where they could travel and some ended up being scrapped.

Key developments that could influence markets on Monday:

- U.S. Federal budget balance