* Asian inventory markets : https://tmsnrt.rs/2zpUAr4

* Nikkei edges up 0.9%, however S&P 500 futures slip

* Bonds prolong rally amid recession chatter

* Payrolls seen slowing, Fed minutes to sound hawkish

By Wayne Cole

SYDNEY, July 4 (Reuters) – Asian share markets began cautiously on Monday as a run of soppy U.S. knowledge instructed draw back dangers for this week’s June payrolls report, whereas the hubbub over doable recession was nonetheless driving a reduction rally in authorities bonds.

The seek for security stored the U.S. greenback close to 20-year highs, although early motion was gentle with U.S. markets on vacation.

Money Treasuries had been shut however futures prolonged their beneficial properties, implying 10-year yields had been holding round 2.88% having fallen 61 foundation factors from their June peak.

MSCI’s broadest index of Asia-Pacific shares outdoors Japan inched up 0.3%, whereas Japan’s Nikkei added 0.9%.

Nonetheless, each S&P 500 futures and Nasdaq futures eased 0.4%, after steadying just a bit on Friday.

David J. Kostin, an analyst at Goldman Sachs, famous that each S&P 500 sector bar vitality noticed unfavourable returns within the first half of the yr amid excessive volatility.

“The present bear market has been completely valuation-driven relatively than the results of lowered earnings estimates,” he added.

“Nonetheless, we anticipate consensus revenue margin forecasts to fall which can result in downward EPS revisions whether or not or not the economic system falls into recession.”

Earnings season begins of July 15 and expectations are being marked decrease given excessive prices and softening knowledge.

The Atlanta Federal Reserve’s a lot watched GDP Now forecast has slid to an annualised -2.1% for the second quarter, implying the nation was already in a technical recession.

The payrolls report on Friday is forecast to indicate jobs development slowing to 270,00Zero in June with common earnings slowing a contact to five.0%.

But minutes of the Fed’s June coverage assembly on Wednesday are nearly sure to sound hawkish given the committee selected to hike charges by a super-sized 75 foundation factors.

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The market is pricing in round an 85% likelihood of one other hike of 75 foundation factors this month and charges at 3.25-3.5% by yr finish.

“However the market has additionally moved to cost in an more and more aggressive price lower profile for the Fed into 2023 and 2024, in step with a rising likelihood of recession,” famous analysts at NAB.

“Round 60bps of Fed cuts at the moment are priced in for 2023.”

In currencies, investor demand for essentially the most liquid protected harbour has tended to learn the U.S. greenback which is close to two-decade highs towards a basket of rivals at 105.04 .

The euro was flat at $1.0433 and never removed from its latest five-year trough of $1.0349. The European Central Financial institution is predicted to boost rates of interest this month for the primary time in a decade, and the euro may get a elevate if it decides on a extra aggressive half-point transfer.

The Japanese yen additionally attracted some protected haven flows late final week, dragging the greenback again to 135.00 yen from a 24-year high of 137.01.

A excessive greenback and rising rates of interest haven’t been variety to non-yielding gold, which was pinned at $1,808 an oz having hit a six-month low final week.

Fears of a worldwide financial downturn additionally undermined industrial metals with copper hitting a 17-month low having sunk 25% from its March peak.

Oil has typically fared higher as provide constraints and the battle in Ukraine offset issues about demand. Output restrictions in Libya and a deliberate strike amongst Norwegian oil and gasoline staff had been simply the newest blows to manufacturing.

Nonetheless, sellers had been out early Monday and Brent slipped 34 cents to $111.29, whereas U.S. crude eased 23 cents to $108.20 per barrel.

(Reorting by Wayne Cole; Enhancing by Sam Holmes)