[MARKET ANALYSIS] T-note futures resumed their declines as higher oil prices added to ongoing inflationary pressures
USTs: -6.5 ticks
- Resumed last week's downturn as the upside in oil prices further added to the ongoing inflationary concerns.
Bunds: -50 ticks
- Continued its slide to sub-124.00 territory amid energy-related headwinds and looming EU supply.
JGBs: -53 ticks
- Declined as yields climbed with the 10yr yield at its highest in around 3 decades amid BoJ June rate hike expectations and with Japanese PM Takaichi set to announce an extra budget, which sources noted would likely be funded by fresh debt, while participants also await today's 5yr JGB auction.
Context
The sharp decline in T-note futures reflects heightened inflationary pressures driven by rising oil prices, which is likely to affect Fed policy expectations. This pattern of weakness in fixed income suggests that the market is pricing in higher rates due to concerns around sustained inflation, potentially impacting both UST and global bond yields across the board.
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