Early Asia wrap: Is the NFP cat out of the bag?

Asian markets are buoyant ahead of the US labour report as US Treasury yields continued to decline on Thursday, anticipating a softer US non-farm payrolls release. There is some market speculation that Fed Chair Powell let the NFP cat out of the bag during his relatively dovish presser.

The dovish Powell lean is still reverberating across global markets, propelling Asian stocks toward a potential second consecutive weekly gain. In fact, these gains could mark highs not witnessed in well over a year, showcasing the enduring impact of Powell's remarks on global market sentiment.

Remember, folks, this is less about inflation and more about jobs after Chair Powell, in no uncertain terms, noted that a material weakening in the labour market could precipitate rate cuts even if inflation were to remain relatively sticky and moderately elevated.

Indeed, this Jobs report is a major litmus test for near-term rate cut expectations( June or more likely July).

Beyond the yen the next big Asia performance comes from Chinese offshore equities, coupled with the inflows observed, indicating growing foreign investor interest in the region. The decline in USDCNH suggests real inflows are driving Chinese yuan strength today.

Despite ongoing challenges in China's economic fundamentals, such as slowing growth and regulatory uncertainties, investors appear to be finding potential opportunities amid emerging economic and policy greenshoots.