[MARKET ANALYSIS] Treasuries are subdued amid recent pressure from rate hike bets and upside in oil

USTs: -2.5 ticks

• Continued to trickle lower amid upside in long-end yields as money market pricing is leaning towards a September Fed rate hike, and with Treasuries also facing headwinds from higher oil prices.

Bunds: -24 ticks

• Extended on declines with Bund futures testing 123.00 to the downside and are at their lowest level in 15 years, while participants await supply and looming data.

JGBs: -39 ticks

• Followed suit to the recent declines in global peers as the Japanese 10yr yield approaches the 3.00% level, with markets gearing up for a potential BoJ rate hike this month, while prices are also not helped by an incoming 10yr auction and with US Treasury Secretary Bessent telling Japanese officials that rate hikes are needed.

Synchronised global rate selloffs of this kind have historically been driven less by any single domestic story than by a common repricing of terminal rate expectations, with the long end bearing the move and curves steepening as hikes get priced nearer. The three legs here behave differently: Treasuries are the subdued leg, dragged by oil-fed inflation premia and money market pricing leaning toward a near-term Fed hike; Bunds are the weakest on a relative basis, a pattern that has recurred when a long-dated low yielder tests a multi-year floor, since stops and supply tend to compound the move once a big level gives way. JGBs carry the most idiosyncratic risk, with the 10yr approaching a round level, a policy meeting priced as live, auction supply ahead, and unusually direct US official commentary pressing for Japanese tightening, a combination that has in past episodes made auctions and the meeting itself the decisive events rather than the drift between them. Worth noting is the transmission channel: oil upside feeding breakevens, and official jawboning compressing the BoJ's room to hold. The follow-ons are the Japanese auction result, the supply and data calendar in Europe, and whether oil holds its gains, since crude-driven rate pressure has historically faded quickly when the energy move reverses.