The global bond rally gathered pace, with dismal economic data in both the US and Europe stoking anticipation that major central banks may lower rates in the next year.

Just two days before the US jobs report, data showed the gradual cooling in the labor market that the Fed would like to see. Private payrolls increased 103,000 last month, trailing estimates and lending credence to Wall Street's dovish stance. Germany's factory orders unexpectedly fell, highlighting how manufacturing in Europe's largest economy remains stuck in a rut.

US 10-year yields fell further to 4.12%, while two-year bond rates edged slightly higher - a healthy sign, according to some traders, after a massive repricing of Fed bets by the front end of the US curve. Oil fell below $70 a barrel as concerns about excess supplies overshadowed a report showing shrinking US inventories.

Fed policymakers meet next week for the final time in 2023. While no change in the federal funds rate target is expected, they are scheduled to release quarterly forecasts that could alter market- implied expectations, which have been leaning towards more easing next year in response to weaker-than-expected economic data.

Earlier on Wednesday, markets fully priced six quarter-point rate cuts by the European Central Bank in 2024, bringing the key rate down to 2.5%. Although bets were pared slightly later in the day, Deutsche Bank AG helped stoke the dovish sentiment by revising its outlook to also forecast 150 basis points of cuts.