Bets that the Federal Reserve will deliver further interest rate increases rippled through Asian markets on Friday. Japanese government bonds slumped, the yen held close to 160 per dollar and bitcoin slid below $69,000, while regional equity benchmarks gave back much of an early rebound as investor unease over Nvidia's leadership change continued to weigh on AI-linked shares.

Fed and rates

Japan's 10-year government bond yield rose about 7 basis points to around 2.87%, touching the day's high. JGBs tracked US Treasuries lower for a second straight session as traders added to wagers on more forceful Fed tightening, with the benchmark US 10-year yield trading near 5.13%.

Overnight, New York Fed President John Williams said inflation remains stubbornly high and that the central bank will need to act over time to bring it back to 2%. He described the US economy as getting stronger but not overheating. His remarks followed this week's hotter-than-expected October consumer price data, after which markets priced a high probability of a quarter-point hike at the Fed's 9 December decision, along with an outside chance of a half-point move. That gathering is the Fed's next scheduled policy decision, giving markets a fixed point to watch as they calibrate rate expectations.

Yen and Japan

Dollar-yen traded near 159.90. Finance Minister Satsuki Katayama said she is seeing one-sided, rapid currency moves and will communicate with the US Treasury to respond appropriately, adding that the two countries set out a shared stance on currencies at their summit. She declined to comment on intervention.

Her remarks came after the New York Fed confirmed that the US Treasury bought yen in July — its first yen-buying intervention since 1998 — alongside Japan's own intervention in the currency. That history gives the approach to 160 added significance, since both governments have already shown this year that they are willing to step into the market. Katayama also said the government will bring forward winter subsidies for utility bills to ease energy costs for households.

Oil and geopolitics

Brent crude traded near $95.70 and WTI near $88.40, both slightly lower. That was despite a claim by Iran's Revolutionary Guards that they destroyed a US early-warning radar in Bahrain in response to an attack on a telecommunications tower in Sirik. The claim could not be independently verified, and there was no immediate US comment. The Guards also warned companies working with the US over oil shipments through the Strait of Hormuz, the world's most consequential oil chokepoint, which carries roughly a fifth of global oil volumes — one reason warnings about the waterway resonate so directly in crude prices.

Barclays said the market is too relaxed about the risks, noting that Middle East flows remain around 85% of pre-war levels — still 15% below normal — and that inventories outside China are depressed. Goldman Sachs likewise said risks to its oil forecast are skewed to the upside. Airlines are feeling the pressure as fuel hedges struck before the war expire, with jet fuel holding near $148 a barrel.

Asian equities

The Nikkei 225 was up about 0.8% near 61,300 in afternoon trade, down from a gain of about 1.4% at midday. The broader Topix rose about 0.3%. The Kospi reversed an early 2% advance to trade about 0.7% lower near 5,300, with SK Hynix down more than 2% and Samsung Electronics off about 0.6%, while the Kosdaq held a gain of about 1.5%. Hong Kong's Hang Seng fell about 1% to near 23,770, and the Shanghai Composite edged up about 0.2%. The People's Bank of China set its USD/CNY reference rate at 6.7152, against an estimate of 6.6756.

Jensen Huang's resignation as Nvidia chief executive remained the main drag on AI names. Nvidia shares fell about 3% in extended US trading, and South Korea's Naver also slipped. With Nvidia among the heaviest weights in global benchmarks, its swings rarely stay confined to a single stock — which is why chipmakers and AI suppliers across Asia tend to trade in sympathy. Citi said investors may look to AMD, Arista and Broadcom as alternatives. In China, SMIC reported record third-quarter revenue of about $3.19 billion and more than doubled its profit. Its co-chief executive said full-year revenue should top $12 billion, but warned that tight supplies of chipmaking equipment could disrupt capital spending.

AI and tech

Earnings continued to support the AI spending story. Cisco beat forecasts and lifted its full-year outlook, with AI revenue from hyperscalers set to more than double. Applied Materials topped fourth-quarter expectations and guided above consensus as chip equipment demand holds. Cerebras reported record revenue, raised its 2026 outlook and said it expects revenue to triple in 2027, with a backlog of around $26 billion. Goldman Sachs forecast that annualised AI-related spending will reach $1.4 trillion by the end of 2027, nearly 4% of the US economy — figures that explain why results from suppliers such as Cisco and Applied Materials are treated as gauges of AI demand across the industry. Separately, ByteDance plans a $6 billion share buyback at a valuation of about $400 billion, up 20% in a year, according to a report.

Gold and crypto

Gold rose about 0.7% to near $3,914 and silver traded around $50. BlackRock described the outlook for gold as more balanced, with central bank buying offsetting pressure from higher real yields and a firm dollar. The asset manager sees support for the metal as intact despite a near 30% drop from its record high, and expects milder gains ahead. Société Générale expects January's commodity index rebalancing to add about $3.3 billion of net buying in gold futures.

Bitcoin dropped more than 6% to below $69,000, slipping under $70,000 for the first time since August, as US spot bitcoin ETFs extended a run of outflows that has taken November's withdrawals to close to $2 billion. With November's outflows nearing that mark, whether they persist through the Fed's 9 December decision is the detail many traders will be tracking.

Australia and New Zealand

The Australian dollar traded near 0.6800 and the New Zealand dollar near 0.5540. The yield advantage that Australian 10-year bonds held over Treasuries earlier in the year has disappeared, with the Fed leaning toward hikes and the Reserve Bank of Australia appearing to be on hold. UBS expects the RBA to keep policy restrictive, with no rate cuts before late 2027, as the AI boom fuels inflation while growth slows to 1.4%. In New Zealand, the manufacturing PMI eased to 54.9 in October but marked a 16th straight month of expansion.

Coming up

Anthropic is due to price its IPO on 18 November, with Nasdaq trading set to begin the following day. The deal is reported to be about six times oversubscribed, and the company is targeting a valuation of around $1 trillion — half the $2 trillion figure once whispered about in market circles. After a session in which AI-linked shares struggled for footing, the pricing will also serve as a read on investor appetite for large AI listings.