Morning bid: A bond bounce, or a bull trap?

WASHINGTON: A look at the day ahead in European and global markets from Tom Westbrook

Relief extended from Wall Street to Marunouchi on Thursday, with bond yields and the dollar down further and stock markets stabilising. Gold rose. Asian stocks outside Japan (and China, which remains on holiday) rose 1% (.MIAPJ0000PUS).

A cooler-than-expected US private payrolls report and Wednesday's 5% drop in crude oil prices have helped.

The oil slump was particularly noteworthy as the biggest in more than a year, pushing the price below where it was a year ago. So oil is no longer inflationary.

The yen has also risen to the strong side of 149 per dollar, giving traders something of a break from white-knuckling uncertainty over possible intervention by Japan.

But risk sentiment has taken a proper beating on the view that interest rates will stay high for longer, and it's hard to see a durable recovery, since even if that view were to change, the catalyst would likely be a global recession.

Economic news in the Asia session was also less than encouraging, as the soaring price of rice has inflation on the rise in South Korea and the Philippines.

And in any case, the 10-year U.S. Treasury yield - a benchmark for global asset pricing - is still up nearly 90 basis points on the year, after a 200 bp rise last year.

Despite the breather, it makes for a febrile mood leading into Friday's U.S. jobs data, which caps the first week of the year's final quarter.