10-year Treasury yield nears 2026 peak

0921 ET – The benchmark 10-year Treasury yield, which is closely watched for things like mortgage rates, edged up today to hit its second-highest level this year. It’s just a few basis points from its 2026 high of 4.668% reached on May 29, according to Dow Jones Market Data.

U.S. Treasury Yields Stay Elevated, Dollar Edges Lower

0940 GMT – U.S. Treasury yields trade steady on the day, with the 10-year yield close to an earlier two-month high, while the dollar is marginally lower. Investors remain cautious as oil prices rise and Middle East tensions continue, leaving a risk that yields and the dollar could rise. “The pullback [in the U.S. dollar] could prove limited, however, as Treasury yields remain at elevated levels and geopolitical tensions could continue to fuel safe-haven demand,” DHF Capital S.A’s Bas Kooijman says in a note. Brent crude rises 3.5% to $94.19. The 10-year Treasury yield is last up 0.2 basis points at 4.630%, having earlier hit a high of 4.642%, according to Tradeweb. The DXY dollar index falls 0.1% to 101.102, having hit a one-week high of 101.210 overnight. ([email protected])

German 10-Year Bund Yield Has Scope to Fall by Year End, HSBC Says

1320 GMT – HSBC retains its end-2026 forecast for the 10-year German Bund yield at 2.80%, strategist Chris Attfield says in a note. The current level is 3.185%, according to LSEG. Ten-year Bund yields are more likely to track moves in two-year German debt than in 10-year U.S. Treasurys, he says. As such, European Central Bank policy will be crucial for this expectation of lower 10-year German yields, “although yields will doubtless continue to be buffeted by developments in the Middle East,” Attfield says. “In our view the curve will continue to be driven from the short end in the coming month.” ([email protected])

Gilt Yields Carry Risk Premium Due to Fiscal Policy Uncertainty

1124 GMT – Uncertainty around the U.K.’s fiscal policy has added around 20 basis points to U.K. government bond yields, or gilt yields, UBS Investment Bank economist Arend Kapteyn says in a note. If the government maintains its fiscal rules at this year’s autumn budget as it pledged, U.K. government bonds could rally, with yields dropping by at least 20bps, Kapteyn says. “If the rules are changed, however, the risk premium could rise materially.” Ten-year gilt yields are up 1.6bps to last trade at 5.044%, Tradeweb data show. ([email protected])

Eurozone Bond Yields Rise as Oil Prices Move Higher

0654 GMT – Eurozone government bond yields open slightly higher as oil prices increase, while lower-than-expected headline U.K. inflation for June has little immediate impact. Brent is up 2% to $92.85 per barrel as hostilities in the Middle East continue. U.K. headline inflation decelerated to 2.6% in June from 2.8% in May, coming in below analysts’ expectations of 2.7% in The Wall Street Journal’s poll. The 10-year Bund yield rises 1.6 basis points to 3.180%, according to LSEG data. ([email protected])

Germany’s Bund Auction Expected to Be Well Received

0559 GMT – The German Finance Agency’s tap of 2.60% May 2041 and 3.40% May 2047 Bunds should go ahead smoothly, Danske Bank’s Kristoffer Kjaer Lomholt says in a note. “This should be an uneventful tap auction as there is usually decent demand at the auction for the 15Y-20Y segment on the German curve as this has been a cheap segment on the curve when we look at ASW-spreads,” the director in fixed income and FX research says. The German Finance Agency will auction a total of 2 billion euros in the two Bunds. ([email protected])

U.K. Inflation Data to Set Tone for Bond Markets, Oil Prices in Focus

0553 GMT – U.K. inflation, which is expected to decelerate, should set the tone in bond markets this morning, while oil prices remain in the driving seat, Commerzbank’s Hauke Siemssen says in a note. While a renewed rise in Brent oil price to $92 per barrel is driving the bearish market action as strikes between the U.S. and Iran continue and the Houthis are threatening shipping in the Red Sea, “this morning, declining U.K. inflation figures could set a more benign tone,” the rates strategist says. U.K. headline and core CPI are expected to have edged lower in June, according to The Wall Street Journal’s poll of analysts. ([email protected])

U.S. Front-End Treasury Yields Remain Near Local Highs

0544 GMT – J.P. Morgan takes a wait-and-see position before opting for outright duration in U.S. front-end Treasurys, its strategists say in a note. “With front-end yields remaining near local highs, the Federal Reserve in its blackout period, and labor market data still weeks away, we continue to prefer patience before advocating for outright duration positions at current levels,” they write. The two-year U.S. Treasury yield is down 0.8 basis points to 4.252%, not far from a multimonth high of 4.298% hit on July 14, according to Tradeweb data. ([email protected])

U.S. Treasury Yields Little Changed; 20-Year Bond Auction Awaited

0535 GMT – U.S. Treasury yields are trading little changed in Asian trade, as investors navigate between higher oil prices and hopes of an end to hostilities between the U.S. and Iran. Investors will also gauge demand at the Treasury’s $13 billion auction of 20-year bonds. “Given a higher level of outright yields and less supportive valuations, we think [Wednesday’s] auction can be digested smoothly,” strategists at J.P. Morgan say in a note. The two-year Treasury yield declines 0.6 basis point to 4.254%, while the 10-year Treasury yield is up 0.2 basis point at 4.629%, according to Tradeweb. ([email protected])

Eurozone Front-End Rates Seen Rangebound

0521 GMT – Front-end eurozone rates are expected to remain confined within a range of consistent market expectations of a terminal European Central Bank deposit rate between 2.50% and 2.75%, says Santander CIB’s Antonio Garcia Pascual in a note. “As long as oil prices stay within the assumptions of the ECB’s mild and baseline scenarios, we expect this range to hold,” the global head of economics says. At current levels, Santander CIB again sees an opportunity to open tactical longs in front-end rates, he says. The ECB raised interest rates by 25 bps in June, bringing the deposit rate to 2.25%. It is expected to stay on hold when it announces a monetary policy decision on Thursday. ([email protected])

JGB Futures Fall, Tracking Declines in U.S. Treasury Market

0004 GMT — JGB futures fall in the early Tokyo session, tracking overnight price declines in U.S. Treasury market. Both JGBs and Treasurys tend to move in tandem. JGB prices could also be weighed by ongoing rise in crude oil prices, which could lead to higher inflation in Japan and quicker pace of BOJ rate increases. Meanwhile, Japan’s Finance Ministry is scheduled to auction today about 300 billion yen of 40-year sovereign debt. “We expect a decent to slightly strong auction result,” SMBC Nikko Securities’ Miki Den says in a research report. “The small issuance size coupled with demand from real-money investors should prevent a weak outcome,” the senior Japan rates strategist adds. Benchmark 10-year JGB futures are Y0.21 lower at Y127.48. ([email protected])