Rising oil prices have intensified inflation concerns, boosting investor expectations for higher interest rates from the Federal Reserve. Global bond yields have rebounded to their highest levels in nearly two decades.
On Tuesday, Japanese and Australian bond prices declined, with the 10-year Japanese government bond yield touching 3%, its lowest level since 1996. Meanwhile, U.S. Treasuries were sold off, pushing the 10-year U.S. Treasury yield to its highest level since January last year. The Bloomberg Global Sovereign Bond Yield Index rose for the fourth consecutive trading day on Monday, climbing to 3.72%, its highest level since mid-2008.
Market expectations for higher short-term interest rates in the U.S. and globally are driving investors to reassess neutral policy rates, which have already been gradually rising.
The latest catalyst behind the yield surge was remarks by Federal Reserve Chair Kevin Warsh on Friday, in which he reaffirmed his commitment to ultimately bringing inflation under control. The bond sell-off has created fresh challenges for Treasury Secretary Steven Mnuchin and President Donald Trump.
Tonight marks the start of a series of key U.S. data releases, including the ISM manufacturing report, ADP employment figures, and non-farm payrolls. These reports will offer closer insight into whether Mr. Warsh’s comments on Friday align with the current state of the U.S. economy.
Plugin Case Analysis
Gold: Prices remain range-bound above 4,400, showing stable momentum without clear breakout signals. Today’s focus should be on guidance from tonight’s ISM data, particularly buying opportunities if the price breaks through and retests the blue zone. Additionally, liquidity around the 4,400 level should be closely monitored.
(Gold 15-minute chart)
Nasdaq: Yesterday, our plugin highlighted the blue zone, indicating a perfect buy-on-retest opportunity following a breakout—exactly as expected. Currently, prices have returned above 29,500. Traders holding overnight long positions should consider locking in some profits before initiating new buy-limit orders on pullbacks.
(Nasdaq 15-minute chart)
Crude Oil: Although our plugin advised caution and maintaining a wait-and-see approach, it is worth noting that prices are approaching the $90 level again. With negotiations and conflict escalation currently at a stalemate, the upward momentum may have reached its limit, and prices are likely to face resistance between $90 and $95. Without clear signs of further escalation, chasing long positions is not recommended; instead, potential shorting opportunities should be considered.
(Crude Oil 15-minute chart)
Key Economic Data & Events Today:
22:00 U.S. August ISM Manufacturing PMI
