Yen Surges, Oil Slides in European Session Amid Bond Yield Concerns

Key headlines from the session:

Market data:

• WTI crude oil dropped 2.4% to $92.36 per barrel.
• The yen was the day's top performer, while the Swiss franc lagged.
• Ten-year Treasury yields rose 0.9 basis points to 5.17%.
• Gold advanced 0.6% to $4,305.
• European stocks traded higher, and S&P 500 futures added 0.4%.
• Bitcoin gained 0.5% to $84,725.

Even as Treasury yields have been breaking out this week, broader markets remained calm in European trading today as the week winds down.

The drop in oil prices may be providing investors some relief, easing near-term inflation worries — for now at least. WTI crude fell 2.4% to $92.36 after discussions of a phased US-Iran deal that could reopen the Strait of Hormuz. Meanwhile, ship traffic data shows only single-digit crossings through the strait in the past 24 hours. But the hopeful optimism is helping to cap oil prices for now.

In the bond market, the 10-year yield nudged up to 5.17%, still below yesterday's high of 5.22%. The sentiment continues to underscore the narrative that pressure remains high. The selloff accelerated in US trading yesterday, and that will remain on investors' minds as they eye the upcoming session.

The yen was a notable mover, with USD/JPY falling back below 158.00 to about 157.60. Japan Finance Minister Katayama earlier said that the principles behind July's joint intervention still hold. Then Prime Minister Takaichi revealed that US President Trump told her a weaker yen is putting pressure on US trade.

These comments appear to signal traders not to push yen weakness too far, leading to some USD/JPY selling.

The US dollar was slightly weaker on the day, supported by improved risk appetite. EUR/USD rose 0.2% to 1.1400, and AUD/USD gained 0.3% to 0.7030.

After struggles yesterday, European stocks fared better today, aiming for a rebound to close the week. US futures also pointed to a more positive open, with tech shares leading the bounce.

That said, this improved risk profile could quickly reverse as sentiment remains fragile. The bond market is the key caveat, and fresh selling pressure could easily weaken risk mood again before the week ends.

The key question for US trading is whether the 10-year yield can stay below yesterday's 5.22% high. A renewed push above that level would test how comfortable equities are with yields well above 5%.