Asian markets are buckling up for a rough ride this Monday, still reeling from last Friday's seismic shifts in the global financial landscape. The trigger? A U.S. employment report that missed the mark so badly didn't just drop jaws—it dropped stocks and bond yields while sending volatility and rate cut expectations through the roof.

Last week, the mood was already souring in Asia, thanks to a cocktail of unsettling developments: a surprisingly hawkish turn from the Bank of Japan, China's economic pace slowing to a crawl, and U.S. tech giants delivering earnings that were more 'meh' than marvellous. Mix these together, and you have the perfect market meltdown recipe.

The MSCI Asia ex-Japan stock index took a nosedive, logging its biggest fall in over two years with a 2.5% drop on Friday. Not to be outdone, Japan’s Nikkei 225 and the broader Topix index took a dramatic plunge, recording their worst days since March 2020 and 2016, respectively. The Nikkei fell by a staggering 5.8%, and the Topix wasn't far behind with a 6.1% tumble.

With Wall Street in a tailspin after the dismal U.S. payroll data, an early Monday market meltdown in Asia seems more like a sure bet than a possibility. While today's panic might be tomorrow's punchline, it certainly highlights how twitchy the markets are to any rumblings from the U.S. economic data front.

In a dramatic finale, the two-year U.S. Treasury yield took a cliff dive, marking its steepest single-day drop since the banking shake-up last March—down a full 30 basis points. Over the week, it shed 50 basis points, a nosedive reminiscent of the darkest days of the infamous Black Monday. This stark drop-off serves as a harsh reminder of the ongoing market jitters and the rocky road that could lie ahead.

In the thrilling world of equities, the VIX volatility index took a joyride on Friday, doubling from the previous day's levels, effectively strapping traders into the rollercoaster nobody asked for.

The frenzied rush to unwind carry trades catapulted the yen nearly 5% higher against the dollar last week, placing it in the top four weeks of yen strength seen in the last quarter-century.

Meanwhile, U.S. bond yields took a nosedive, theoretically easing financial conditions. According to Goldman Sachs's emerging market financial conditions index, which hit its lowest mark since March, conditions are loosening. However, the reason behind this isn't exactly cause for celebration—it's driven by mounting recession fears, casting a long shadow over the market's mood.

The once-cherished narrative of a U.S. economic 'soft landing' has vanished faster than free snacks in a trading room, replaced by the grim prospect of a 'hard landing.' Amid these darkening skies, traders are now betting big on the Fed's response, seeing a 70% probability of a rate cut by half a percentage point next month. The market's crystal ball forecasts a total of 115 basis points in easing by the end of this year and an ambitious 200 basis points by next June, signalling that the belt-loosening is far from over.

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