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Bitcoin and bond yields are in focus

Bitcoin rose modestly on Thursday as the U.S. 10-year Treasury yield pulled back from its intraday high. The cryptocurrency was trading around $84,800, up 1% over the past 24 hours, as markets priced in a more cautious Federal Reserve ahead of Friday’s September nonfarm payrolls report.

Fed expectations have faded quickly

Fed Vice Chair Philip Jefferson said yields across all maturities have risen since the September meeting and investors have been reassessing the macroeconomic outlook. Jefferson’s cautious tone reinforced views that markets may have gotten ahead of the central bank on the pace of rate hikes.

  • The probability of a Fed rate hike at the Oct. 28 meeting fell to 30% from 70% earlier this week.
  • The chance of at least one rate hike by year-end dropped to 80% from 95% a week earlier.

With that shift, the U.S. 10-year Treasury yield eased from an intraday peak of 5.36% to 5.217%. The 2-year Treasury yield, which is more sensitive to Fed policy, also fell 12.3 basis points to 4.764%.

Macroeconomic data showed inflation pressures remain

Jobs and PMI data failed to reassure markets

Weekly jobless claims came in at 197,000, slightly below both the previous 198,000 reading and the market forecast of 200,000. The ISM manufacturing PMI fell to 54.5 in September, but remained above the 50 threshold, signaling that expansion continued.

Within the report, the new orders index rose to 55.3 from 53.7, while the prices paid index climbed to 77.9 from 71.1. The data suggested there was no clear slowdown in economic activity or easing in inflation pressures, but investors are waiting for Friday’s jobs report to set the next direction. The market expects 90,000 new jobs in September and the unemployment rate to remain at 4.1%.

European debt stress and energy prices are weighing on risk appetite

France-Germany bond spread widened

Markets are tracking not only U.S. data but also risk signals from Europe. The yield spread between 10-year French and German bonds widened to 135 basis points, well above the 50-80 basis-point range seen in recent years, while credit default swap premiums on French debt hit their highest level in 13 years.

The euro fell 0.9% to 1.1231 against the dollar on the same day, while in energy markets WTI crude rose 2.5% to $92.63 and Brent crude gained 3.6% to $101.53. The backdrop kept interest in alternative assets alive and showed Bitcoin starting the fourth quarter on relatively firm footing after a 42.7% gain in the third quarter.

Meanwhile, a $3.8 million security incident was reported in the NEAR Intents ecosystem. The project team said the vulnerability in the interaction between the smart contract and the Omni deposit and withdrawal infrastructure had been closed and services were temporarily suspended.

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