Asian and global markets are under scrutiny as high Treasury yields put upward pressure on borrowing costs, challenging lofty equity valuations. This economic climate has kept the U.S. dollar near its multi-month peaks. Such yields have maintained investor caution in the stock markets as regional markets continue their year-end performance evaluations.

This week stands out with limited trading volumes due to the New Year holiday, alongside a sparse data calendar. China's manufacturing sector awaits its PMI factory surveys, while the U.S. is set to release the ISM survey result. As the week began, MSCI's Asia-Pacific index of shares outside Japan experienced a 0.2% decline despite a consistent 16% annual gain. Similarly, Japan's Nikkei eased by 0.2%, holding onto its 20% yearly gains.

South Korea's main stock index finds itself wrapped in a whirlwind of political uncertainty, resulting in over 9% losses throughout the year. Encouragingly, there was a slight uptick of 0.3% recently. Contrastingly, Jeju Air, one of South Korea's budget carriers, has suffered severely, reaching record-low prices following a tragic plane crash that led to 179 fatalities.

In China, blue-chip stocks reported a 0.3% rise and, mostly driven by September's promises of economic stimulus from Beijing, amassed nearly a 16% annual increase. European markets, reflected in the EUROSTOXX 50 futures, experienced minor gains, while FTSE and DAX futures exhibited little change.

Amidst thinned holiday trading, the U.S. saw Wall Street's major indexes—S&P 500 and Nasdaq—fall 0.1% each. This represents a continuation of the broad-based sell-off witnessed last Friday. Notably, the S&P 500 estimates a 25% rise annually, and the Nasdaq, 31%, sparking concerns over stretched valuations compared to Treasury yields.

Yields on 10-year Treasury bonds hover near eight-month highs at 4.631%, a significant 75 basis points increase from the year's onset. This has occurred despite the Federal Reserve's 100 basis points rate cuts. The synopsis from Quasar Elizundia portrays a market apprehensive of less restrictive monetary policies than originally anticipated, potentially stifling corporate earnings for 2025 and swaying investment resolutions.

Bond investors remain vigilant about an anticipated surge in supply factors. U.S. President-elect Donald Trump's tax cut proposals, albeit vague on curtailing the rising budget deficit, invoke more caution. Trump plans to unveil a series of executive orders upon taking office that span various contemporary issues, including immigration, energy, and cryptocurrency policies.

Meanwhile, the U.S. dollar's demand remains strong. Interest rate differentials fostered a 6.5% yearly increase against a basket of major currencies. Despite this, the euro retains a 5% devaluation from start-of-year figures, barely holding at $1.0427, slightly above its recent trough of $1.0344.

Simultaneously, the yen's value remains relatively stagnant, restricted from dipping further due to the palpable risk of Japan's monetary intervention. The influx of a strong dollar has adversely impacted gold values, yet precious metal buyers see a 28% contemporary annual increase, persistently valued at $2,624 an ounce.

In energy sectors, oil markets struggled as demand apprehensions, notably from China, adversely influenced prices. This situation necessitated OPEC+ to renegotiate supply limitations continuously. Brent crude oil fluctuated modestly, recently ticking to $73.80 a barrel, while U.S. crude lagged slightly at $70.43 per barrel.