The Asia-Pacific financial markets witnessed a subdued trading session as investors awaited the full resumption of US trading post-holiday. The spotlight was on New Zealand, where economic data turned positive, with the services PMI rising to 51.5, signaling an end to a 21-month contraction. This positive data supported the NZD and AUD. Japan's bond market faced pressure, with the 40-year JGB yield reaching 4%, the highest since its inception in 2007, due to fiscal and tax-cut concerns. China maintained its loan prime rates, delivered its strongest yuan fix since May 2023, and increased US soybean purchases. Geopolitics remained a focal point, with Trump's admission of potential misinformation regarding European troop deployments to Greenland, opening a door for de-escalation. The 10-year US Treasury yield continued its upward trend, reaching a 4-month high. Overall, the session was characterized by limited data and a cautious market stance, with major FX pairs trading in a consolidation phase. Asian stock markets saw a decline, with Japan's Nikkei 225 experiencing its fourth consecutive session of losses, Hong Kong's Hang Seng, Shanghai Composite, and Australia's S&P/ASX 200 also witnessing negative returns.
