[MARKET ANALYSIS] Treasury futures remained subdued after yields climbed alongside a surge in oil as geopolitics dominated the tape

USTs: -0.5 ticks

• Lingered near the prior day's trough after yields climbed alongside oil prices as geopolitics dominated the tape.

Bunds: -44 ticks

• Remained pressured amid higher energy prices and recent hawkish-leaning ECB comments.

JGBs: -21 ticks

• Tracked losses in global peers with US Treasury Secretary Bessent providing more opinions on Japanese policy in which he noted that they should stop the reflation now and that Abenomics has worked, but added that it is time for Takaichi-nomics and that Japan needs to shift. There were also comments from BoJ Governor Ueda, who noted that monetary conditions remain accommodative and that they would like to continue increasing rates, but refrained from commenting regarding the details of his recent discussion with Bessent, and on the market pricing of a strong chance of rate hike this month.

Selloffs of this shape, where core rates and energy move together, are the standard signature of a geopolitical supply-shock tape: the transmission runs through the inflation leg rather than the growth leg, so breakevens and energy-sensitive curves tend to bear the move while the classic flight-to-quality bid stays absent. That distinction matters for what follows, since oil-driven rate weakness has historically faded with the crude move itself, whereas weakness rooted in central bank rhetoric tends to persist. The Bund underperformance relative to USTs fits the established pattern in energy-led episodes, given the euro area's importer status and a governing council whose hawkish wing has form for leaning against energy pass-through. The JGB leg carries a second driver: public US commentary on Japanese policy of this kind is unusual, and past episodes of foreign officials pressing for policy normalisation have tended to steepen rather than resolve the domestic debate, with the BoJ's own communications remaining the operative signal for the front of the JGB curve. The near-term calendar points to whether crude holds the move, whether ECB speakers extend the hawkish framing, and the BoJ meeting where elevated hike pricing meets a governor who has consistently kept optionality open.