Reuters - Asia share indexes were generally higher Monday as some semblance of calm returned to bond markets after last week's wild ride, while progress in the U.S. stimulus package underpinned optimism about the world economy and sent oil prices higher.
China's official manufacturing PMI out over the weekend missed forecasts, but Japan figures showed the fastest growth in two years. Investors are also counting on upbeat news from U.S. data due this week including the February payrolls report.
Helping sentiment was news deliveries of the newly approved Johnson & Johnson COVID-19 vaccine should start Tuesday.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.8%, after shedding 3.7% Friday.
Japan's Nikkei rallied 2.1%, while Chinese blue chips added 0.5%.
Nasdaq futures bounced 1.2% and S&P 500 futures 0.9%. Eurostoxx 50 futures and FTSE futures both rose 1.1%.
Yields on U.S. 10-year notes came off to 1.41%, from last week's peak of 1.61%, though they still ended last week 11 basis points higher and were up 50 basis points on the year so far.
"The bond moves Friday still feel like a pause for air, rather than the catalyst for a move toward calmer waters," said Rodrigo Catril, a senior strategist at NAB.
"Market participants remain nervous over the prospect of higher inflation as economies look to reopen aided by vaccine roll outs, high levels of savings along with solid fiscal and monetary support."
Analysts at Bank of America noted the bond bear market was now one of the most severe on record with the annualized price return from 10-year U.S. government bonds down 29% since August, with Australia off 19%, the UK 16% and Canada 10%.
The rout owed much to expectations of faster U.S. growth as the House passed President Joe Biden's $1.9 trillion coronavirus relief package, sending it to Senate.
Bank of America's U.S. economist Michelle Meyer lifted her forecast for economic growth to 6.5% for this year and 5% next, due to the likelihood of the larger stimulus package, better news on the virus front and encouraging data.
Virus cases were also down 72% since a Jan. 12 peak and hospitalizations are following closely behind, Bank of America added.
Higher U.S. yields combined with the general shift to safety helped the dollar index rebound to 90.917 from a seven-week low of 89.677.
On Monday, the euro was steady at $1.2086, compared to last week's peak of $1.2242, while the dollar held near a six-month top on the yen at 106.57.
"Riskier" currencies and those exposed to commodities bounced a little after taking a beating late last week, with the Australian and Canadian dollars up and emerging markets from Brazil to Turkey looking steadier.
Nonyielding gold was still nursing losses after hitting an eight-month low Friday en route to its worst month since November 2016. It was last at $1,743 an ounce, just above a trough around $1,716.
Oil prices extended their gains ahead of an OPEC meeting this week where supply could be increased. Brent gained 4.8% last week and WTI 3.8%, while both were about 20% higher over February as a whole.
Brent was last up $1.27 at $65.69, while U.S. crude rose $1.22 to $62.72 per barrel.