Rates ease and equities gain across Europe as US jobs data nears

Headlines:

Markets:

• The 10-year Treasury yield has slipped 1.6 basis points to 5.22%.
• The franc is leading and the euro is lagging today.
• Gold is up 0.1% at $4,180.
• WTI crude has fallen 3.6% to $89.50.
• European shares are firmer, with S&P 500 futures adding 0.4%.
• Bitcoin has gained 2.2% to $86,511.

All attention is on the US jobs report today. Ahead of that release, broader markets are calmer in European morning trading.

Bonds remain the main force in play, and yields are easing as investors look for fresh non-farm payrolls numbers before committing to their next move.

The 10-year Treasury yield now stands at 5.22%, well below the 5.34% peak hit yesterday, the strongest reading since 2002. Yields on Germany's 10-year bund have also retreated to 3.40%, staying well off the 3.65% level seen earlier this week.

That is giving equities more room to move, with European stocks bouncing back and US futures extending the rebound from the previous session. Germany's DAX is 0.9% higher, France's CAC 40 is up 0.5%, and S&P 500 futures are 0.4% firmer heading into the open.

Cheaper financing costs are supporting stocks, alongside reduced inflation worries as oil prices decline. WTI crude is down more than 3% to $89.50, with traders still weighing the Middle East situation after a week of sharp swings in the market.

On the data front, euro area inflation for September was hot, with the headline rate reaching 3.8%. The core gauge also ticked up to 2.5% in September from 2.4% in August, although the ECB may be able to overlook that mild acceleration for now ahead of its October decision. Rate markets are still pricing around 28% odds of a 25-basis-point hike this month, little changed from before the release.

Elsewhere, the dollar is mixed today, with EUR/USD easing to 1.1225 and USD/JPY down slightly at 157.68. Gold is holding a modest bounce at $4,180, consolidating just below the $4,200 level.

The US jobs report is now the deciding factor behind whether the calm across markets holds or bond vigilantes stage a return and stir up turmoil before the weekend.