Global stocks, bonds gain ahead of US data, yen rallies

Global stocks and bonds surged on Thursday ahead of key US economic data and central banker remarks that may support expectations for a Federal Reserve rate increase this month. Japanese government bond yields dropped from record highs, mirroring a recovery in global bonds. The yen strengthened, reaching its biggest two-day rally since mid-August, in anticipation of official intervention.

Oil prices slipped, hovering around $95 a barrel, amid uncertainty over possible military action between the US and Iran. European equities, represented by the STOXX 600, ticked higher, while US futures (ESc1, NQc1) rose by about 0.1%. Investors are closely watching Friday's US payrolls report, following disappointing private labor data for August.

Fed Board Governor Christopher Waller is scheduled to speak after New York Fed President John Williams commented on rising long-term bond yields, attributing them to a robust economy and expressing his need to collect more data before deciding on monetary policy. Analyst Lombard Odier chief economist Samy Chaar suggested that higher yields could indicate strong nominal growth, benefiting multi-asset portfolios.

Money markets now estimate a 60% probability of a Fed rate hike this month, up from less than 40% a week ago. Sovereign bond yields fell, having reached multi-year peaks in the previous week due to heightened concerns over tighter monetary policy and deteriorating fiscal conditions. The 10-year US benchmark yield dropped 3 basis points to 4.766%, and Germany's 10-year yield declined 1 basis point to 3.363%.

The Japanese 30-year government bond yield slipped 8 basis points to 4.085%. The dollar index, which measures the US currency against six peers, slipped 0.34% to 99.25, partly due to the yen's surge, which has risen nearly 2% over two days, poised for its largest two-day gain since early August interventions. The euro edged up 0.16% to around $1.1606, while the pound strengthened 0.1% to $1.349, and the Swiss franc rose to 0.8093 francs, leaving the dollar down 0.44%.

Oil prices dropped for the first time in nearly a week, but investor concerns persisted over the escalating conflict between the US and Iran. Brent crude LCOc1 fell to $94.57 per barrel, down 1.1%. Gold rose 1.14% to $4,436.34 an ounce, nearly 13% above its six-month low, driven by geopolitical uncertainties and worries about the US dollar's devaluation.

The Dutch central bank recently moved most of its gold reserves from North American vaults to London to prepare for a potential crisis.