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All eyes are on the US jobs report
The U.S. nonfarm payrolls report for December will be released later on Friday. Economists expect an increase of 155,000 jobs, up from 227,000 in November, and an unchanged unemployment rate of 4.2%. Analysts from Goldman Sachs And CitigroupHowever, they assume that both numbers will be worse than the consensus forecast.

Markets in the US are dark, markets in Europe are closing higher
US markets remained closed on Thursday in honor of former US President Jimmy Carter, who died at the end of December at the age of 100. Asia Pacific markets fell on Friday. Japan’s Nikkei 225 fell about 1%, adding to losses in the region, as data showed household spending fell less than expected in November. China’s CSI 300 fell 1.25% after the People’s Bank of China suspended bond purchases.

All-time lows in Chinese 10-year bond yields
Chinese government bonds have enjoyed a strong rally since December, with 10-year yields plunging to all-time lows this month after falling about 34 basis points, LSEG data shows. Credit demand from consumers and businesses in China was weak, leading banks to buy up government bonds, putting pressure on yields.

Fed governor believes December rate cut should be ‘final step’
Federal Reserve Governor Michelle Bowman said the Fed’s rate cut in December was its “final step in the policy recalibration period.” That suggests Bowman, who is a voting member of the Federal Open Market Committee, may oppose further cuts this year. Other Fed officials who spoke this week were more optimistic about a rate cut.

(PRO) UK small and mid-cap stocks to buy
There may be some questions about the strength of the UK economy at this time. But Barclays continues to see investment opportunities in the country, naming three small and mid-cap stocks it is currently betting on – two of which have implied upside potential of over 40%.

Long-term borrowing costs for the UK government are currently at their highest level in almost three decades. From 6am London time the yield is 30 years of gold plating was 5.359%, the highest since 1998.

The yield on gilts – a fancy British term for government bonds like U.S. Treasuries – soared after the UK Debt Management Office on Tuesday issued 2.25 billion pounds ($2.83 billion) of maturity gilts of 30 years had been auctioned.

Typically, bond yields rise in response to higher interest rates, which remain elevated when inflation remains stubbornly above most central banks’ 2% target.

In the UK this is a problem. Headline inflation rose to 2.6% on an annual basis in November, the second straight monthly increase.

Worse still, in October, Britain’s gross domestic product contracted by 0.1% per month, raising the specter of stagflation – when an economy struggles with high inflation and a stagnant economy.

Labor government plans to raise taxes and significantly increase borrowing have also put pressure on government bond prices, which are moving in the opposite direction to yields.

Also consider currency movements. Higher government bond yields often lead to a stronger currency as the yields attract global investors who increase demand.

The British poundHowever, has fallen against the US dollar even as gilt yields have risen.

Taken together, these factors paint a picture of a weak economy, making it natural for investors to demand higher returns if they were to lend money to the UK government.

But we should not overestimate the situation. Consider Liz Truss’s disastrous 2022 ‘mini-budget’, which led to a massive sell-off in UK government bonds and a spike in yields within days (yields usually move at a glacial pace).

During this time the 30-year US Treasury bond yield was around 3.5%. On Friday it was at 4.9%, meaning UK government bonds are keeping pace with government bonds and not running amok. In other words, the recent rise in UK government bond yields is not necessarily due to the turmoil in the UK, as bond yields, interest rates and inflation fears remain high worldwide.

It is always scary when there is turbulence in a country’s financial markets. If others are facing the same problems, the scenario may be a little more bearable.

—CNBC’s Chloe Taylor, Jenni Reid, Karen Gilchrist and Elliot Smith contributed to this report.