(Bloomberg) — European stocks looked set to track a selloff in Asia as US Treasury yields near this year’s high kept risk sentiment in check.

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Euro Stoxx 50 futures slid 0.4%, while contracts for US equities also declined. The MSCI Asia Pacific Index slumped to a three-week low with shares in South Korea and Japan bearing the brunt of the losses.

Global equities are headed for their worst week since mid-April as the latest commentary from Federal Reserve officials renew doubts over the timing of interest-rate cut. Elevated bond yields have added to the angst, with Treasuries falling across the curve in the previous session on tepid demand in the $44 billion sale of seven-year securities.

Investors are bracing for a set of inflation reports from the US and Europe on Friday to refine their monetary policy outlook.

“The market has fallen under the spell of the bond market genie and higher yields,” said Tony Sycamore, market analyst with IG Australia Pty Ltd. “The focus has turned to managing downside risks should we see firmer-than-expected US or European inflation data tomorrow.”

Treasuries yields edged lower in Asian trading after the ten-year rate jumped six basis points in the previous session. Weak auction result heightened worries that funding the US deficit will drive up yields at a time when the Fed is in no rush to cut rates. Australian yields climbed.

A gauge of dollar strength gained for the third session, hitting Asian currencies.

In Japan, the yen advanced after weakening to beyond 157.52 per dollar on Wednesday, falling through a level that had prompted the latest round of suspected action. The nation’s 10-year bonds reversed an earlier loss.

Elsewhere, China’s onshore yuan was little changed after falling to the lowest level since November on Wednesday. The rand extended losses as South Africa’s election vote count gathers pace.

“Bond yields may be moving higher mainly due to supply of bonds and the continued massive deficit — and not because of a concern around inflation or strong economy,” said Eric Johnston at Cantor Fitzgerald.

In New Zealand, the new government delivered on its election promise to cut taxes in its first budget even as the Treasury forecast bigger deficits and a delayed return to surplus.

Story continues

In the corporate world, Chinese authorities are poised to impose a record fine on PricewaterhouseCoopers LLP over its auditing work for China Evergrande Group, according to people familiar with the matter. Brookfield is in exclusive talks to acquire a majority stake in Neoen SA in a deal valuing the French renewable energy developer at about €6.1 billion.

In commodities, oil was steady after falling on Wednesday as traders look to US stockpile data and an OPEC+ meeting on the weekend for more clarity on the supply and demand outlook.

Key events this week:

• Eurozone economic confidence, unemployment, consumer confidence, Thursday

• US initial jobless claims, GDP, Thursday

• Fed’s John Williams and Lorie Logan speak, Thursday

• Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday

• China official manufacturing and non-manufacturing PMI, Friday

• Eurozone CPI, Friday

• US consumer income, spending, PCE deflator, Friday

• Fed’s Raphael Bostic speak, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.6% as of 2:23 p.m. Tokyo time

• Nasdaq 100 futures fell 0.7%

• Japan’s Topix fell 0.6%

• Australia’s S&P/ASX 200 fell 0.4%

• Hong Kong’s Hang Seng fell 1.4%

• The Shanghai Composite fell 0.6%

• Euro Stoxx 50 futures fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0791

• The Japanese yen rose 0.4% to 157.07 per dollar

• The offshore yuan was little changed at 7.2676 per dollar

Cryptocurrencies

• Bitcoin rose 0.9% to $68,010.32

• Ether rose 0.6% to $3,772.56

Bonds

Commodities

• West Texas Intermediate crude fell 0.2% to $79.11 a barrel

• Spot gold fell 0.2% to $2,333.95 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Masaki Kondo.

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