Asian bonds followed Treasuries lower as renewed geopolitical tensions drove oil prices higher, fueling inflation concerns and expectations for further monetary tightening. 77%, its highest level since January 2025.

965% after touching a three-decade high in the previous session. Brent crude extended gains in early Asian trading to over $91 a barrel after renewed fighting in the Middle East.

The US and Iran exchanged strikes for the first time in about a month as American forces hit an island in the Strait of Hormuz and the Islamic Republic responded by launching attacks on the United Arab Emirates and Jordan. Elsewhere, the MSCI Asia Pacific equities gauge was little changed, with focus on the technology sector after Nvidia Corp.

, deepening its collaboration with the Taiwanese chipmaker. The flare-up in Middle East tensions has dimmed prospects for a normalization of shipping through Hormuz, keeping oil prices elevated and adding to inflation concerns.

“With traders tracking geopolitical volatility as well as potential seasonal volatility, it will be interesting to see which market impulse from last week might carry over to this week,” said Chris Larkin at E*Trade from Morgan Stanley. “Unexpectedly strong labor-market data might be taken as bad news by the market, since it could reinforce expectations for a rate hike.”

The August US payrolls data is expected to be consistent with general steadiness in the labor market that’s helping the Fed focus more intently on its battle with inflation. Friday’s jobs report “will be critical,” though the Sept.

’s Andrew Tyler. He’s shifted to a “tactically cautious” view on US stocks for the next few weeks, but expects a strong backdrop will persist amid economic data and earnings.