Aug 5 (Reuters) - A look at the day ahead in European

and global markets from Wayne Cole.

It's a sea of red in Asian share markets as investors flee

from risk and a lot of crowded trades unwind in an unruly

manner. Popular positions from yen carry trades to crypto are

being dumped in a rush to the exits, with volatility spiking and

liquidity drying up.

There's also talk of investors having to close profitable

positions because they need to cover losses elsewhere, which may

be one reason gold has struggled.

The sprint to sell has seen trading halts triggered in

several markets including the Topix and KOSPI, while the Nikkei

was down a scary 7% at one stage. The index is now in bear

territory having fallen 20% from its peak, which was hit less

than a month ago.

Investors are hoping central banks will ride to the rescue

with a global version of the Fed put. Futures now imply a 73%

chance the Fed will cut by 50 basis points in September, and a

total 115 basis points by Christmas. Rates are seen near 3% by

the end of next year.

Markets have priced in another 74 basis points of cuts from

the ECB and 47 basis points from the BoE. There are also doubts

the Bank of Japan will go ahead and hike again in October, less

than a week after it took a turn to the hawkish side. As a

result, JGBs recouped all their recent losses sending 10-year

yields back to where they were in April.

There's even chatter of an inter-meeting easing from the

Fed, which seems like wishful thinking from investors in the

red. The Fed's Goolsbee played down the impact of the payrolls

report on Friday and has a chance to do so again later on

Monday, along with San Francisco President Daly.

A jobless rate of 4.25% is still pretty low historically and

analysts suspect it will come back down in August. Those citing

the Sahm rule should remember economics is not actually a

science, no matter how much it might like to be. It wasn't that

long ago that negative interest rates were considered to be

impossible.

The U.S. ISM services index is also due and analysts are

hoping for a bounce after June's surprising slide. Clearly its

jobs index will bear watching given how many workers there are

in the sector. The Fed's survey of senior loan officers will get

more than its usual attention for any sign of lending stress.

It is notable that Treasuries have not extended Friday's

huge rally, with 10-year yields back at 3.78% having hit a low

of 3.723% earlier. Fed fund futures also pared early gains,

particularly in the 2025 contracts.

Still, two-year yields are now just eight basis points away

from slipping under the 10-year and turning the curve positive

for the first time since mid-2022. Such a dis-inversion has

sometimes heralded recessions in the past. Goldman Sachs has

upped the risk of recession to 25%, while JPMorgan puts it as

twice that.

Key developments that could influence markets on Monday:

- Final global service PMIs, EU producer prices

- U.S. ISM services survey for July, Fed releases senior

loan officers survey

- Federal Reserve Bank of Chicago President Austan Goolsbee

speaks, as does Fed San Francisco President Mary Daly