(Bloomberg) — US futures slipped as bond yields rose on inflation risks and uncertainty about the path of American rate policy, stifling potential gains from China’s move to ease Covid restrictions.

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Contracts on the S&P 500 retreated 0.4% while those on the Nasdaq 100 were down 0.3%. Treasury yields climbed, lifting the dollar into positive territory. The two-year rate most sensitive to policy rose to the highest this month.

A hotter-than-expected US jobs report last week along with a jump in average hourly earnings point to fresh inflation risks and more bond volatility. While dovish Fedspeak may be keeping yields anchored, they have some way to go to before they close the gap with terminal rate expectations.

“We still think Treasuries have no business in trading in the 3.5% area if the Fed is about to hike rates to almost 5%,” ING Groep NV strategists including Antoine Bouvet wrote in a note.

The S&P 500 is on course for its biggest fourth-quarter gain since 1999 amid hopes that US inflation has peaked and bond yields have stabilized.

Friday’s payrolls data boosted wagers on where US rates will top out in the current tightening cycle without undoing bets on the size of next week’s rate hike, which still call for 50 basis points of tightening.

Morgan Stanley strategist Michael Wilson, one of the US stock market’s most vocal skeptics, said investors are better off booking profits. He expects the S&P 500 to resume declines after the index crossed above its 200-day moving average last week, saying the downtrend since the beginning of the year remains intact.

Read more: Morgan Stanley’s Michael Wilson Is a Stock Market Seller Again

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Asian equities rose after Chinese authorities eased Covid testing requirements across major cities over the weekend as Beijing appears to be engineering a gradual shift away from its strict Covid Zero policy amid elevated cases and public protests.

Commodities also advanced on the prospect of more demand from China. Oil, iron ore and copper climbed.

“The damage being done to the Chinese economy in general, the longer the aforementioned Covid restrictions stay in place, is clear to see,” Simon Ballard, chief economist at First Abu Dhabi Bank, wrote in a note to clients. “China now desperately needs policies to bolster the labour market and help to underpin domestic demand.”

In the premarket, Tesla Inc. fell on news the electric vehicle maker plans to lower production at its Shanghai factory.

Bitcoin extended gains for a second day to trade above $17,000.

Key events this week:

• S&P Global PMI for the Euro zone, Monday

• US factory orders, durable goods orders, ISM services index, Monday

• ECB President Christine Lagarde speaks, Monday

• Australia interest rate decision, Tuesday

• US trade, Tuesday

• EIA crude oil inventory report, Wednesday

• Euro zone GDP, Wednesday

• US MBA mortgage applications, Wednesday

• ECB President Christine Lagarde speaks, Thursday

• US initial jobless claims, Thursday

• China PPI, aggregate financing, money supply, new yuan loans, Friday

• US PPI, wholesale inventories, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• Futures on the S&P 500 fell 0.4% as of 5:58 a.m. New York time

• Futures on the Nasdaq 100 fell 0.3%

• Futures on the Dow Jones Industrial Average fell 0.4%

• The Stoxx Europe 600 fell 0.1%

• The MSCI World index rose 0.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0536

• The British pound fell 0.3% to $1.2247

• The Japanese yen fell 0.8% to 135.35 per dollar

Cryptocurrencies

• Bitcoin rose 1.1% to $17,302.5

• Ether rose 1.6% to $1,296.63

Bonds

• The yield on 10-year Treasuries advanced three basis points to 3.52%

• Germany’s 10-year yield declined two basis points to 1.84%

• Britain’s 10-year yield declined five basis points to 3.11%

Commodities

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Tassia Sipahutar and Michael Msika.

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