European Stocks Recover as Bond Yields Stabilize, Bringing Temporary Relief

Key market headlines for Friday include:

Here is the latest market snapshot:

• 10-year Treasury yields increased 2 basis points to 5.25%
• WTI crude fell 0.9% to $90.68
• Gold rose 1.1% to $4,180
• AUD was the best performer, JPY the worst on Friday
• European stocks gained; S&P 500 futures were up 0.4%
• Bitcoin advanced 0.8% to $82,443

Trading was relatively subdued on Friday as participants absorbed the calm following the previous day's pullback in bond yields.

US President Trump indicated he may delay any strikes on Iran until after the midterm elections, which implies the Middle East status quo will continue for at least several more months.

Oil prices retreated during Friday's session, with WTI crude declining 0.9% to $90.68. This decline helps reduce some inflationary pressures, while the bond market remains more stable. On Thursday, the 10-year Treasury yield nearly broke a multi-decade high, reaching 5.35% before pulling back. Yields are now stabilizing near 5.25%, and although they are not rising further, they continue to keep broader markets cautious.

As bond markets enjoy some relief, broader markets are also taking a breather on Friday.

The US dollar showed mixed performance: EUR/USD was unchanged at 1.1207, while USD/JPY rose 0.3% to 158.30. AUD/USD also gained 0.3%, reaching 0.6975, as major currencies reacted to the calm in bond markets.

European equity markets posted modest gains on Friday but remain on track for a weekly decline. The DAX rose 0.9% and the CAC 40 added 0.5%, marking a rebound from Thursday's sharp losses. However, concerns over rising borrowing costs and French fiscal risks are expected to keep weighing on European sentiment in the coming weeks.

US futures are performing better, led by tech stocks. This follows a late rebound on Wall Street on Thursday, extending the improved mood as the bond sell-off pauses. With yields easing, US stocks aim to end the week on a positive note. S&P 500 futures were up 0.4%, while Nasdaq futures rose 0.8%.

Gold also benefited from the improved market sentiment, rising 1.1% to $4,180. The $4,200 level continues to be a significant barrier for gold bulls as they seek to push prices higher.

Looking ahead, the economic calendar features the Canadian jobs report for September and the University of Michigan consumer survey for October. However, the main focus remains on bond markets, to see if the current calm can persist ahead of the shortened trading week. As a note, the US bond market will be closed on Monday, though stock markets will be open.