Asian stocks dip, bonds in focus after torrid September

Asian markets experienced a subdued performance on Thursday, with global bond markets under pressure following a disappointing September, according to a report. The slowdown in US inflation in August, resulting in lower-than-expected price increases, has dampened expectations of a Federal Reserve rate hike later this month. This, in turn, has led to a reduction in anticipation of a 0.3% increase in the Nasdaq and S&P 500 futures.

Despite Micron Technology's impressive earnings from their AI chip division, market sentiment remained dampened by ongoing peace talks between the US and Iran, aimed at ending the seven-month conflict in the Middle East. These talks, along with elevated oil prices, further contributed to the lackluster market sentiment. Charu Chanana, the chief investment strategist at Saxo, noted that while Micron's earnings reinforced the demand for AI and memory, investors are increasingly questioning the sustainability of this demand.

The risk of a prolonged period of higher interest rates looms as bond yields surged in September, with the 10-year Treasury note reaching a peak since mid-June 2007 and the 30-year note nearing its highest level since June 2002. Investors are closely monitoring the trajectory of US Treasury yields, as the 5% level holds significant importance.

"The velocity of the rate move is getting investors' attention," said Darren Shames, the global head of rates sales at Nomura.