U.S. stock markets were expected to open lower on Thursday, judging by trade in equity index futures, as a sell-off in government bonds gathered pace.
Weekly jobless claims and productivity and costs data are due for release this session, but the wild swings in bond markets are expected to take centre-stage for the time being.
The benchmark-10-year Treasury yield, which moves in the opposite direction of its price, topped 2.40 percent in European trade, setting a new high for the year. It tracked the 10-year German Bund yield, which soared to just shy of 1 percent, extending a rise that began on Wednesday after European Central Bank President Mario Draghi played down the impact of bond market volatility.
"Over the last few months we've seen some pretty extraordinary moves in the bond markets. In April, and again over the first few days of June, bonds have traded over 2-3 percent daily trading ranges - ranges that would be considered extreme a few years ago for such safe, predictable, non-volatile core investment instruments," Bill Blain, a strategist at Mint Partners, said in a note.
"It's not just bonds. We hear from investors they are increasingly concerned stock market valuations look overblown, and there are fears bubbles have developed in many other markets including property," he added.
Stock index futures for the Dow Jones Industrial Average, the S&P 500 and Nasdaq were all in negative territory in early trade – suggesting that Wall Street shares may unwind some of the previous day's gains.
European equity markets were broadly lower as the rout in bond markets raised fears that higher borrowing costs could hurt corporate profits and the economic recovery. Asian shares ended the session mixed, with Japan's blue-chip Nikkei stock index only just closing in positive territory.
Concern about Greece, which remains in talks with its international creditors to secure more aid, may also weigh on sentiment, analysts said.
EU Economic and Monetary Affairs Commissioner Pierre Moscovici said on Thursday that he thought Greece and its creditors would reach a cash-for-reforms deal and that Greece would remain in the euro zone.
Still, Greek shares, which jumped 4 percent on Wednesday, fell 2.5 percent on Thursday on uncertainty about a deal being struck, as a loan repayment to the International Monetary Fund looms on Friday.
Back in the U.S., weekly jobless claims data will be in focus a day ahead of the May U.S. non-farm payrolls report.
Analysts expect weekly jobless claims to come in at around 279,000, down slightly from last week's 282,000.
Earnings due out this session include JM Smuckers, Michaels Cos, Joy Global, Lands' End, Verifone, Diamond Foods, Cooper Cos and Ciena.