MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.7%

Share markets faltered in Asia on Thursday, while U.S. inflation data loomed as a threat for bonds and interest rates.

It also took a little steam out of the tech-driven bull run in stock ​markets, with Nikkei going flat, while South Korean shares slid 1.2%. MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.7%.

Reports from Japan suggested the ​government planned to issue “bridging bonds” to fund flagship programmes aimed at boosting investment in growth and economic security.

Oil prices rose 2% and ‌Treasury yields edged higher as the developments in the Middle East added to the conflicting signals over the talks after the U.S. president dismissed an Iranian report of a deal to restore traffic through the Strait of Hormuz.

Over the next 2 weeks, we expect either a deal for a new ceasefire, or the current ceasefire will have collapsed with active hostilities resuming, said Madison Cartwright, a senior geo-economics ​analyst at CBA.

Cartwright put ⁠a 70% probability on a deal being agreed, while cautioning that the fate of the strait was up in the air.

Insurance through the strait has become prohibitively ​expensive and it’s unclear how and at what price insurance will be made available, he added. It is also not clear if Iran will charge a toll, or ​a toll by another name.

With transits of the strait still only at a trickle, Brent crude rose 2.1% to $96.31 a barrel.

Yields on 10-year notes edged up 3 basis points to 4.512% as the risk of oil staying high kept upward pressure on inflation expectations.

For Europe, EUROSTOXX 50 futures and FTSE futures both dropped 0.6%, while DAX futures ‌eased 0.3%. S&P ⁠500 futures were little changed while Nasdaq futures eased 0.2%.