Global equities caught their breath on Friday, October 2, as a brutal week-long bond selloff showed signs of easing. European shares opened higher, U.S. stock futures edged up, and Treasury yields retreated from multi-decade highs. But with most Asian markets closing lower and yields still elevated, the rally looks tentative — and everything now hinges on the September U.S. jobs report due at 8:30 a.m. ET, which could decide whether the Federal Reserve hikes again in October.
The pan-European STOXX 600 climbed 0.4% to 629.18 by 0720 GMT, after plunging 1.3% on Thursday to a three-month low. Germany's DAX added 0.4%, the U.K.'s FTSE 100 rose 0.1–0.2% after a 1.7% slide on Thursday, and France's CAC 40 gained 0.4–0.5%. Technology and industrial stocks led the advance while banks stayed weak — European lenders are headed for their worst week since April.
Asia told a different story. Japan's Nikkei 225 closed down about 0.9% at 68,309, the MSCI Asia-Pacific ex-Japan index fell 0.5%, and Hong Kong's Hang Seng tumbled 2.7–2.8% in its first session after the National Day holiday to its lowest since July. Mainland Chinese markets are closed for the holiday until October 7.
In the U.S., Thursday ended in the green: the S&P 500 rose 0.2% to 7,666.45, bouncing off a two-week low and snapping a three-day losing streak; the Nasdaq Composite added 0.04% and the Dow rose 0.04–0.1% to 50,926.56. Friday's premarket futures pointed modestly higher, with S&P futures up 0.3% and Nasdaq futures up 0.4%.
The bond market did the heavy lifting. The U.S. 10-year Treasury yield eased to around 5.25% on Friday after hitting 5.34% intraday on Thursday — the highest since 2002. The 30-year yield slipped to about 5.629% after touching 5.67% on Thursday, also a 24-year high, while the 2-year yield dropped roughly 10 basis points overnight to 4.80%, its biggest one-day decline since August 2025.
The turn came after Fed Vice Chair Philip Jefferson signaled patience on further rate hikes, following a 25-basis-point increase in September. That was enough to lure dip-buyers back into a market that had pushed the 10-year up 87.1 basis points in the third quarter — the sharpest quarterly jump since 1994.
Europe's bond rout also cooled. Germany's 10-year bund fell to 3.48% on Friday, well off Monday's 3.65%, the highest since June 2009. Britain's 30-year gilt briefly breached 6% on Thursday, the first time since 1998. France's 10-year yield reached its highest since 2002, with the France–Germany spread at its widest in 14 years. In Japan, the 10-year government bond yield held near 3.055–3.11%, a 30-year high dating to 1996.
The September nonfarm payrolls report lands at 8:30 a.m. ET. Economists polled by Reuters expect 90,000 new jobs; a Dow Jones survey puts the figure lower at 84,000. The unemployment rate is forecast to hold at 4.1%, with average hourly earnings up 0.3% month over month and 3.2% year over year.
The real market-moving number will be wages. A hot wage print could revive the case for an October rate hike; CME FedWatch now puts the odds at about 25%, down from roughly 70% a week ago.
This week's supporting data has been mixed. The ADP report showed 90,000 private-sector jobs added, and weekly jobless claims came in at 197,000 — a third straight week below 200,000. But the prices-paid component of the ISM manufacturing index jumped from 71.1 to 77.9, a reminder that inflation pressures are far from gone. Fed officials remain divided: Dallas Fed President Logan has said rates may need to rise at least another 50 basis points, Governor Cook has flagged AI-driven inflation risks in 2027, and Minneapolis Fed President Kashkari has said more hikes may be needed through 2027.
Commodities are trading the same "cooler rate expectations" theme. Brent crude fell 0.9% to $101.32 a barrel and WTI dropped 1.3% to $91.71 on Friday morning, though both remain above the $100 and $90 marks on Middle East tensions — the Iran war, a third U.S. carrier heading to the region, and China halting oil-product exports. Gold futures rose 0.34% to $4,216.7 an ounce. The dollar index held above 102, a 17- to 18-month high, with the euro near $1.12, its weakest since May 2025. Bitcoin topped $86,885 ahead of the payrolls data.
For all the relief, the foundations of Friday's bounce look fragile. Asian equities were still falling, and Europe's gains were described as "tentative at best" — yields remain elevated and the payrolls report has yet to land. A hotter-than-expected wage number could send yields breaking out again and trigger another round of equity selling. Even the jobs data itself comes with an asterisk: September's hiring was heavily concentrated in health care.
For investors, tonight's payrolls and wage numbers are the real test of whether this rebound has legs.