Global Markets Steady Ahead of US Jobs Report as Bond Volatility Eases
Global markets steadied on Friday as government bond volatility eased ahead of the US jobs report. The dollar and yen rose, while oil prices dropped, providing some relief to investors.
The improvement in risk sentiment was seen after weeks of turmoil across global bond markets, where rising energy prices and persistent inflation concerns had pushed borrowing costs higher. In Europe, longer-dated sovereign bonds advanced, but the gains were uneven, with German debt favored as a safe haven within the euro zone.
Germany's 10-year government bond yield fell 10 basis points to around 4.84%, while France's 10-year yield was little changed at 4.939%. The widening spread between French and German borrowing costs highlighted growing investor concern about France's fiscal position, with one economist warning that it had the potential to be a crisis.
The US jobs report for September could have an immediate impact on expectations for the Federal Reserve's next move, with markets pricing only a 25% probability of another rate increase this month. Strong wage growth in the employment report could reinforce concerns about persistent inflation and push Treasury yields and the dollar higher, while weaker labor-market data could strengthen expectations for easier monetary policy.
The turmoil in European sovereign debt markets has also redirected some safe-haven demand toward US Treasuries, the dollar, yen, and Swiss franc. The euro fell to $1.1231, extending losses after declining 0.8% Thursday to reach its lowest level since May 2025.