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

After a volatile week when markets zeroed in on major economies' precarious fiscal health, with a sell-off in Treasuries and government bonds from Japan and Britain, fixed income investors are now setting the broader market agenda.

Lacklustre bond auctions in Japan and the U.S. this week underscored the lack of demand for long tenors, as investors send a clear message to governments that in the current climate of uncertainty they need to pay more to borrow for decades down the road.

While beaten-down Treasuries found buyers by the end of the week, The 30-year bond yield remained above the psychologically important 5% threshold in Asian hours on Friday.

Super-long Japanese government bonds were stable but still near record highs touched earlier this week. The 10-year gilt yield hit its highest since January 15 on Thursday.

Wherever you look, there are signs of unease in the markets about the stretched finances of the biggest economies.

Fiscal worries have put pressure on the dollar, which is on course for a weekly loss against the euro and the yen for the first time in five weeks. Safe-haven flows are back, too, with gold set to clock its best week in more than a month.

Since Moody's downgraded its U.S. debt ratings last week, investor attention has fixated on the country's $36 trillion debt pile and U.S. President Donald Trump's tax bill, which could add trillions of dollars more.

Dubbed a "big, beautiful bill" by Trump, it narrowly passed the Republican-controlled U.S. House of Representatives and now heads to the Senate for what is likely to be weeks of debate, keeping investors on the edge.

Investors are also pining for more good news on trade deals as we hit the halfway point of the 90-day pause to Trump's so-called reciprocal tariffs.

Key developments that could influence markets on Friday:

Economic events: Germany GDP data for Q1, UK retail sales data for April

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(By Ankur Banerjee; Editing by Edmund Klamann)