European markets had a much calmer session as investors took a breather after the hectic risk-off wave of the previous day, though equities remained cautious and Treasury yields rebounded.

Session snapshot:

• 10-year Treasury yields: up 5 bps to 5.00%
• WTI crude oil: up 1.6% to $101.07
• Gold: up 0.1% to $4,029
• European stocks: lower; S&P 500 futures -0.2%
• USD and CAD lead, CHF lags on the day

The strong bid in Treasuries looks to be abating for now, with the 10-year yield bouncing back to the 5.00% mark. The 10-year is a key benchmark for borrowing costs across the economy, from mortgages to corporate debt, giving its swings reach well beyond bond markets. That gave the dollar some comfort, with EUR/USD easing back toward 1.1200 and USD/JPY pushing closer to 157.00 on the day. Among the majors, the dollar and the Canadian dollar led, while the Swiss franc lagged.

The rebound in yields came even as oil pushed higher once again, supported by the Saudi-Houthi conflict and concerns of US-Iran attacks. Brent crude, the international benchmark, briefly touched $115 earlier in the day, while WTI, its US counterpart, was up over 1% to around $111 at the time of writing. Elevated energy prices are keeping inflation concerns in the picture, leaving investors on edge over how they will continue to feed into borrowing costs and the outlook for major central banks.

In Europe, a slew of PMI data painted a more mixed picture. Flash PMIs are preliminary readings compiled from early survey responses, with figures above the 50 mark denoting expansion and those below signaling contraction — a dividing line that framed the day's data. Germany's October flash manufacturing PMI beat expectations at 54.2 versus 53.5 expected, but France's October PMI slumped back into contraction as political uncertainty weighed on demand. The eurozone-wide October PMI also missed estimates as growth slowed, keeping the European Central Bank's rate hike dilemma alive. While the readings may not change the equation for the ECB's decision next week, December remains a toss-up for now, with price pressures still keeping up heading into the final quarter of the year. Final October readings, typically published early next month, will show whether the preliminary signals hold.

In the UK, the October flash services PMI beat expectations at 53.1 versus 51.8, holding above the 50 expansion threshold, though September retail sales fell more than expected, complicating the Bank of England's rate hike outlook.

Regional equities remain pinned down by France's fiscal worries, which carry added weight given the country's status as the eurozone's second-largest economy, with the overall risk mood still dour as the selloff from the previous session carries over. US futures reflect the same picture, with S&P 500 futures down 0.2% and Nasdaq futures down 0.1%.

Gold, caught up in the broader market liquidation despite falling real yields, bounced back a little after briefly dipping below $4,000 for the first time in three months earlier in the day. Real yields — nominal Treasury returns adjusted for inflation — are traditionally watched as a measure of the opportunity cost of holding gold, which pays no interest, making the metal's slide against that backdrop stand out. The precious metal is still poised to end the week more than 3% lower, despite Treasury yields having fallen during the week.

Session headlines:

• Falling Treasury yields may be hiding a darker story about the AI boom
• Crude oil extends gains as Saudi-Houthi conflict and concerns of US-Iran attacks keep the market supported
• Gold gets caught in market liquidation despite falling real yields supporting higher prices
• France October PMI slumps back into contraction as political uncertainty weighs on demand
• Germany October flash manufacturing PMI 54.2 vs 53.5 expected
• Eurozone October PMI misses estimates as growth slows, keeping ECB rate hike dilemma alive
• UK October flash services PMI 53.1 vs 51.8 expected
• UK retail sales fall more than expected in September, complicating BOE rate hike outlook

Source: investingLive