Treasury yields extended multiyear highs and stocks slid across the globe in early European trade Thursday as the implications of higher oil prices and strong U.S. growth data reverberated through markets.

Government bonds across the world sold off sharply Wednesday, after U.S. PMI data showed the economy was in unexpectedly rude health--and gave the Federal Reserve more room to raise interest rates. Markets are currently pricing a 68.6% likelihood of a quarter-point rate hike when Federal Reserve policymakers meet next month--up from close to 50% on Tuesday.

Meanwhile, oil prices--which have moved in lockstep with Treasury yields in recent weeks--inched higher as U.S.-Iran talks showed little sign of progress. Brent crude front-month contracts added more than 1% to trade above $104 a barrel, while West Texas Intermediate crude rose by 0.9% to $93 a barrel.

Ten-year yields continued to rise in erratic trade Thursday, adding another 2.2 basis points to 5.138%--on track to settle above their previous highest close in July 2007. Yields on 30-year bonds climbed 3.3 basis points to trade at 5.435%, their highest intraday level since June 2004. Japanese 10-year yields hit highs not seen since 1996, while eurozone bond yields also rose.

Higher borrowing costs weighed on global equities. In the U.S., Nasdaq futures led the losses, with the index dropping 0.7% after hitting new records earlier in the week. Futures for the Dow Jones Industrial Average were 0.3% lower, while S&P 500 futures fell 0.5%. Stocks fell across Asia, while banking and energy-sensitive equities led losses in Europe. The Stoxx 600 traded 0.35% lower in early trade.

The prospect of further rate hikes strengthened the dollar, which held close to an eight-week high against a basket of currencies. Nonyielding assets weakened, with bitcoin's recent rally stalling as the digital asset fell close to $84,000. Gold futures also slipped closer to $4,300 a troy ounce in New York.

For the day ahead, a summit between President Trump and Chinese leader Xi Jinping will be in focus. The two countries agreed to extend a bilateral trade truce until mid-January, Treasury Secretary Scott Bessent said Wednesday. However, expectations for broader agreements on trade are limited, though investors will watch for signs of any co-operation on artificial intelligence.

Several Fed policymakers will speak Thursday, while U.S. data releases include new home sales for August.