NEW YORK/LONDON, Oct 1 (Reuters) - Bond yields fell on Thursday, after the benchmark 10-year Treasury yield earlier hit its highest level since 2002, while stocks also eased as US manufacturing data pointed to sustained inflation pressures.
Yields initially hit fresh highs after the data, which showed that US manufacturing activity was little changed in September, with prices for inputs surging amid strong demand.
Investors also anxiously await Friday's key US monthly jobs report for more clues about the economy.
Yields have been surging around the world as soaring energy costs fan inflation and as the boom in AI and data center building lifts expectations for growth and for where short-term interest rates will settle.
The recent rout in bond prices has pushed Treasury yields to levels that are now attractive, said Oliver Pursche, senior vice president and advisor for Wealthspire Advisors in Westport, Connecticut.
"I'm not suggesting the global bond selloff is over. I am suggesting it's probably overdone," he said.
BOND SELLOFF IN FRANCE, BRITAIN AND JAPAN
The yield on benchmark US 10-year notes was last down 2.07 basis points at 5.272%, from 5.293% late on Wednesday. It earlier rose to 5.34%, its highest level since April 2002.
The 10-year yield posted its biggest quarterly rise this century in the three months to September, with the selling pressure also rippling through bonds in France, Britain and Japan.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 7.28 basis points to 4.814%, from 4.887% late on Wednesday. The 2-year Treasury yield hit its lowest level in about a week.
Meanwhile, the euro hit its lowest point in 17 months, as investors battered European assets, with the European currency falling below $1.13 for the first time since May 2025 against the dollar. The euro was last down 0.79% at $1.1238.
"Europe imports energy and is vulnerable to higher rates, even another eurozone financial crisis. If you made a grid of winners and losers, the US would have more sectors that win than Europe. The likely outcome is a weaker euro currency," said Steven Major, global macro advisor at Tradition.
MSCI's gauge of stocks across the globe (.MIWD00000PUS), fell 4.47 points, or 0.39%, to 1,130.30. The pan-European STOXX 600 (.STOXX), index fell 1.3%.
The Dow Jones Industrial Average (.DJI), fell 106.80 points, or 0.22%, to 50,791.97, the S&P 500 (.SPX), fell 8.24 points, or 0.12%, to 7,642.38 and the Nasdaq Composite (.IXIC), fell 40.92 points, or 0.16%, to 26,817.27.
Shares of Micron Technology (MU.O), were down about 2% despite its better-than-expected revenue forecast and reporting $32 billion customer commitments under its supply agreements.
OIL GAINS
Oil prices extended recent gains, with US crude up 1.52% at $91.79 a barrel and Brent at $100.78 per barrel, up 2.81% on the day.
Stalled peace talks between the US and Iran to end the seven-month-long war in the Middle East have kept crude prices elevated.
Spot gold rose 0.35% to $4,170.68 an ounce.
Reporting by Caroline Valetkevitch in New York and Amanda Cooper in London; additional reporting by Alun John in London and Ankur Banerjee in Singapore; Editing by Gareth Jones, Kirsten Donovan and Alex Richardson
