A look at the day ahead in European and global markets from

Kevin Buckland

Markets are in buoyant mood, clearly anticipating Friday's

hotly awaited U.S. payrolls report will keep the Fed on course

to cut rates this month and once more by year-end.

It was the previous month's payrolls shocker that got

speculation really going that U.S. monetary policy would need to

come down fast, and economists predict an only slightly higher

reading this time around.

Fed Chair Jay Powell surprised many at last month's closely

watched Jackson Hole symposium with a keynote that suggested a

cut on September 17 is coming unless the data gets in the way.

Fedspeak from other officials has been leaning dovish on the

whole, and the window for additional comments closes later today

as the central bank enters a blackout period in the run-up to

its policy gathering.

U.S. stock futures are pointing higher after the S&P 500

notched a record-high close overnight, and the Nasdaq Composite

came within 6 points of doing the same.

European futures are doing the same, and Asian markets from

Japan to Taiwan to mainland China are rising about 1%.

Bond markets too, which had turned so volatile at the start

of the week, have been calmed by a run of soft U.S. jobs data

that has bolstered confidence for a non-farm payrolls report

that will further the narrative for easier Fed policy.

After surging to record highs on Wednesday, Japanese 30-year

government bond yields have retraced about half of that day's

rise. Similarly dated U.S. Treasury yields have slipped to

three-week lows, while two- and 10-year yields have eased to

four-month troughs.

British 30-year gilt yields are back at the levels from a

week ago, before the four-day spike to the highest since 1998.

German and French yields are down from multi-year peaks.

Gold is also biding its time, hovering below Wednesday's

all-time high following a breathless seven-day rally.

That means there's a lot riding on a benign U.S. payrolls

reading. And there's not a lot to distract from it in the

lead-up, with German factory data, British retail sales and

revised euro-area GDP the most noteworthy.

Key developments that could influence markets on Friday:

-U.S. payrolls

-Canada payrolls

-Euro zone revised GDP

-Germany industrial orders, manufacturing output

-UK retail sales, Halifax house prices