Euro implied volatility jumps to highest since before Brexit European stocks snap two-day gain, S&P 500 futures decline Financial markets started the month on an uncertain footing after a dramatic November, with the dollar retreating from a nine-month high, Treasuries falling and European stocks snapping a two-day advance. The U.S. currency declined against most of its 16 major peers before a payrolls report on Friday, while a measure of euro volatility jumped to the highest since before the Brexit vote as investors brace for Italy’s referendum and Austria’s presidential election on Dec. 4 and the European Central Bank’s policy decision in a week’s time. The slump in Treasuries extended the biggest climb in 10-year yields since 2009. European stocks fell with U.S. equity-index futures, while oil advanced after a more than 9 percent rally on Wednesday. Investors will be looking to non-farm payrolls data for more clues on the pace of interest-rate increases, after ADP Research Institute reported the biggest jump in private-sector workers since June. The surge in oil prices following OPEC’s agreement on Wednesday to cut output provides further support for so-called reflation trades after Donald Trump’s election as U.S. president added to expectations for fiscal stimulus and Federal Reserve rate hikes. "We are all waiting for the NFP tomorrow, the referendum in Italy this weekend and the ECB next week,� Athanasios Vamvakidis, head of G-10 currency strategy at Bank of America Merrill Lynch, said in an email. “It’s consolidation ahead of key events." Currencies The dollar slipped 0.2 percent to 114.26 yen at 6:29 a.m. in New York. It weakened 0.4 percent versus the euro to $1.0629. The pound jumped 1 percent to $1.2636 as comments from lawmakers in the U.K. and Europe suggested the nation may find a way to retain access to the single market as part of its exit from the European Union. Bloomberg’s Dollar Spot Index, which tracks the greenback against 10 major peers, slid 0.2 percent after advancing 0.5 percent Wednesday, leaving it up 3.9 percent in November, the most since September 2014.Traders are paying the most since June’s peak to protect against price swings in the euro versus the dollar, according to one-week implied volatility in the currency pair. The yuan dropped 0.1 percent onshore, reflecting dollar strength, and gained 0.2 percent offshore amid strengthening factory gauges and a crackdown on capital flow. Bonds Ten-year Treasury notes yield increased three basis points to 2.41 percent after surging nine basis points Wednesday to their highest close since July last year. It jumped 56 basis points last month. The yield on similar-maturity German bunds added three basis points to 0.30 percent, Private payrolls in the U.S. climbed by 216,000 this month, after a 119,000 gain in October that was revised lower, ADP data showed Wednesday. Economists are predicting an 180,000-worker increase innonfarm payrolls in Friday’s data, after they climbed by 161,000 in October. “A lot of people are beginning to think that it is the end of the bull rally,� said Roger Bridges, the chief global strategist for interest rates and currencies in Sydney at Nikko Asset Management’s Australia unit. The Bloomberg Barclays Global Aggregate Total Return Index of bonds fell 4 percent in November, biggest decline since index started in 1990.

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