(Bloomberg) — Asian equities edged lower with US futures ahead of jobs data that will help shape the outlook for Federal Reserve interest rates.

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Shares in Australia and Japan fell, while those in South Korea were little changed. Contracts for the S&P 500 dropped for a second day after US trading was closed on Thursday to observe a national day of mourning for former President Jimmy Carter.

Emerging market equities entered a correction after declining by more than 10% from a high in October, reflecting uncertainty over US policies and China’s growth prospects.

Treasuries advanced in early Asian trading, following a rout earlier this week that drove 30-year yields to the highest since 2023. Several officials confirmed Thursday that the Fed will likely hold interest rates at current levels for an extended period, only cutting again when inflation meaningfully cools.

An index of the dollar held gains from the prior session. The yen was steady around 158 per dollar. Traders are on alert for the potential Japan will support the yen, with the US jobs report looming as a potential catalyst for sharp moves in the currency.

Sentiment is overall cautious ahead of Friday’s US nonfarm payrolls data that’s expected to show a slowdown in hiring in an otherwise robust labor market. Median estimates for the figures forecast that 165,000 jobs were added to the US economy in December. The unemployment rate is forecast to hold steady at 4.2% and average hourly earnings growth is seen cooling a touch from a month earlier.

“While losing momentum, we are still projecting a relatively firm increase for job gain,” said Oscar Munoz and Gennadiy Goldberg at TD Securities. “We also look for the unemployment rate to stay unchanged at 4.2%, amid a likely loss of momentum in wage growth owing to favorable seasonal factors.”

Elsewhere, the pound slipped to a more than one-year low and gilts sank on concern the UK’s Labour government will struggle to keep the deficit in check as borrowing costs surge.

In Asia, data set for release includes household spending for Australia and industrial production for India, while money supply figures for China may be released any time though Jan. 15.

Australia’s 10-year yield ticked higher in early trading.

US Jobs

Friday’s US jobs data will offer a litmus test for the market’s “hawkish Fed pricing,” according to strategists Ian Lyngen and Vail Hartman at BMO Capital Markets. They noted that the implication from the bounce in Treasuries is that the pre-payrolls setup will be slightly more balanced – despite a bias favoring a strong showing from the employment figures.

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