Asian stocks limped toward a fourth straight weekly decline on Friday and bonds nursed big losses as investors scrambled to catch up with the US Federal Reserve's interest rate outlook, while currency markets were on edge at the end of a wild week.
Fed members' projections for aggressive hikes and persistently high rates over the next year or so has unleashed another round of dollar buying that put other assets on the run.
World stocks hit two-year lows on Thursday and are down 3% this week. The euro and yen fell to 20-year lows and on Thursday, Japanese authorities stepped in to the market for the first time since 1998 to buy yen and arrest its slide.
The resultant spike has the yen up to 142.20 per dollar and on course for its best week in more than a month and has, for now, tapped the brakes on broader dollar gains.
In regional markets MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5% to a two-year low. It is down 3% this week. Japan's Nikkei was closed for a public holiday marking the autumn equinox.
Overnight, Wall Street indexes fell and longer-dated US Treasuries were dumped - sending the 10-year yield up about 20 basis points to 3.71% - as traders tried to adjust to the prospect of US interest rates above 4% for some time.
"The 10-year was playing catch up to the newly calibrated cash rate," said Westpac's head of rates strategy, Damien McColough, in Sydney.
"If you believe the front-end is going to peak at 4.60% can you really sustain 10-year bond yields at 3.70%?" he said.
"It's very skittish price action ... I think that this volatility continues in all markets in the near term (until) the rates market settles."
S&P 500 futures drifted 0.1% higher and European futures rose 0.4% early in the Asia session.
Interest rates are rising sharply almost everywhere in the world, with Britain, Sweden, Switzerland and Norway among hikers this week - driving heavy selling in European bond markets, particularly of gilts.
But the Fed's outlook has overshadowed that in the currency market as both safety flows and higher yields help the greenback, while an energy crisis and war on the doorstep weighs down the euro.
Preliminary manufacturing surveys in Europe and Britain's new finance minister announcing his "Growth Plan" highlight the day ahead.
The euro was last at $0.9844, a fraction over Thursday's 20-year trough at $0.9807 -- although all eyes are on the yen.
Japan has not disclosed the size or details of its yen buying, but dollar/yen took two large legs lower during late Asia and London trading on Thursday and the risk of another is probably enough to scare off speculators for a while.
"It changes the market dynamic in terms of risks-reward for short-term players," said UBS strategist James Malcolm.
The Australian and New Zealand dollars hovered near their lowest levels since mid 2020, with the Aussie last at $0.6638 and the kiwi at $0.5852.
Sterling was parked by its lowest in nearly four decades at $1.1226.
China's yuan, at 7.0964 per dollar in offshore trade on Friday, is near its lowest in more than two years and within striking distance of a record low.
In commodity markets oil is eying a small weekly loss as rate hikes raise demand concerns. Brent crude futures hovered at $90.58 in Asia on Friday.
Gold, which pays no income, has suffered as US yields have gone up and it was last flat at $1,671 an ounce.
Bitcoin has been likewise battered amidst the flight from risky assets and held at $19,322.