— European equities climbed in early trading as long-dated government bond yields slipped and investors awaited the U.S. monthly jobs report later in the day, a key test for expectations of a Fed rate cut in mid-September.
Key Takeaways
- MSCI World up 0.3% and STOXX 600 up 0.4% at 07:52 GMT, recovering from earlier weekly weakness.
- Major European indexes: FTSE 100 +0.3%, CAC 40 +0.2% in early trade.
- Markets largely expect a 25bp Fed rate cut at the Sept. 17 meeting; U.S. payrolls data will be watched closely.
- Long-dated yields eased: France 30‑year 4.3944%, U.K. 30‑year 5.563%, Germany 10‑year 2.7122%.
- 30‑year U.S. Treasuries at 4.8593% after earlier three‑week low in Asian trading.
- Dollar softened (DXY 98.054), euro traded at $1.1678; dollar/yen 148.14 after a trade deal on autos with Japan.
- Oil declined for a third session: Brent $66.65, WTI $63.05; gold steady near $3,546.24.
Verified Facts
European markets opened higher on Sept. 5 after U.S. equities pushed to fresh highs overnight. The S&P 500 reached a record on Thursday following weekly U.S. claims that showed more jobless filings than analysts had expected, lifting risk appetite into Asian trading and into Friday’s European session.
At 07:52 GMT the MSCI World equity index was up 0.3% and Europe’s STOXX 600 advanced 0.4%, putting the region on course for a small weekly gain after earlier losses. The FTSE 100 rose about 0.3% and France’s CAC 40 climbed roughly 0.2% in early dealings.
Long-dated government bond yields eased on Friday after spiking earlier in the week amid investor concern about sovereign finances in several countries. France’s 30‑year yield stood at 4.3944%, down from a Wednesday peak of 4.523%, while the U.K.’s 30‑year yield was 5.563% after touching multi‑decade highs. Germany’s 10‑year Bund yielded 2.7122%; German industrial orders unexpectedly fell in July, official data showed on Friday.
In the U.S., 30‑year Treasuries were around 4.8593%, having dipped to their lowest level in three weeks during Asian hours. The dollar index eased 0.2% to 98.054; the euro traded up 0.2% at $1.1678. Dollar/yen weakened 0.3% to 148.14 after the U.S. and Japan agreed on lower auto tariffs.
Commodity markets were mixed: Brent crude dropped 0.5% to $66.65 a barrel and U.S. West Texas Intermediate fell 0.6% to $63.05. Gold remained steady at $3,546.24 after hitting a record $3,578.50 on Wednesday.
Context & Impact
Traders are pricing in a near‑certain 25 basis point cut from the Federal Reserve at the conclusion of its Sept. 17 meeting, according to LSEG pricing data. A weaker-than-expected U.S. payrolls report would reinforce hopes for a cut and could further support equities and lower yields.
Earlier in the week, worries about fiscal positions in several European countries pushed long-term yields to multi-year highs, weighing on sentiment. The partial retreat in yields on Friday eased some immediate funding concerns and helped markets stabilize.
Lower long-term yields can reduce borrowing costs for governments and businesses, but sustained investor anxiety over public finances would keep a premium on sovereign debt and could limit equity gains. Market attention will likely stay on incoming data and any official comments from central banks over the next two weeks.
Near-term watchlist
- U.S. monthly jobs report (payrolls and unemployment rate)
- Federal Reserve communications ahead of Sept. 17 meeting
- Sovereign bond moves in France and the U.K.
- Oil inventory reports and demand indicators
Official Statements
“If the payrolls print points to slower hiring, it will reinforce expectations of easier policy in September,”
Francesco Sandrini, Amundi (paraphrased)
“Short of an absolutely stellar payrolls print, markets are likely to keep pricing a September cut,”
Ken Crompton, National Australia Bank (paraphrased)
Unconfirmed
- No official change to Fed policy has been announced; market pricing reflects expectations rather than a confirmed decision.
- The exact market reaction to today’s payrolls is contingent on the details of the report (payrolls level, unemployment rate, and wage growth).
Bottom Line
Sentiment in European markets improved as long-term yields eased and investors waited for U.S. jobs data that could cement expectations of a Fed rate cut in mid-September. Traders will monitor the payrolls report closely — its details are likely to determine whether this rally can extend.