Market News

• Investor confidence brittle after selloff on Monday
• ISM manufacturing survey 48.2 last month vs 48.7 in October
• Global bond yields rise as data show input prices rising

SINGAPORE, Dec 2 (Reuters) - The U.S. dollar held its ground on Tuesday as an auction of Japanese government debt drew solid demand, easing investor nerves after a selloff in global fixed income earlier in the week.
The greenback climbed 0.1% against the yen to 155.72 following a sale of 10-year Japanese government bonds which saw the strongest demand since September, prompting a rebound in super-long-dated securities after yields set fresh records earlier in the trading session.

"The auction result appears to have provided a measure of reassurance to the market," said Shoki Omori, chief desk strategist at Mizuho in Tokyo.

Stocks, bonds, cryptocurrencies and the dollar all tumbled on Monday after Bank of Japan Governor Kazuo Ueda said that the central bank would consider the "pros and cons" of raising interest rates at its next policy meeting, sending Japanese two-year yields above 1% for the first time since 2008 and prompting a spillover into global bond markets.
Swaps pricing now indicates a probability of around 70% that the Bank of Japan will hike rates by 25 basis points at its next meeting this month.

Adding to the anxiety was weaker-than-expected manufacturing activity data from the U.S., heaping pressure on the Federal Reserve to cut interest rates at its policy meeting later this month.
"The firming of previously half-hearted bets for a Fed cut on December 10 and a Bank of Japan hike on December 19 should provide more credibility to Tokyo’s intentions to stabilise the JPY," analysts from DBS wrote in a research report.

PESSIMISM ABOUT US DEMAND

The U.S. dollar index , which measures the greenback's strength against a basket of six major peers, fluctuated between gains and losses after finding a bottom during U.S. trading hours on Monday. The gauge was last trading at 99.441, edging higher after snapping a seven-day streak of declines.
Data released on Monday showed U.S. manufacturing contracted for the ninth straight month in November, as the Institute for Supply Management's manufacturing PMI dropped to 48.2 in November from 48.7 a month earlier.