Global fixed-income markets paused on Monday as investors awaited details of new U.S. sanctions targeting Iran, with core eurozone and Japanese government bond yields holding steady through the session.
German Schatz 2-year yields remained at 2.838%, while the 10-year Bund yield held at 3.256% and the 30-year yield was unchanged at 3.762%. French OAT 10-year yields stood at 4.128% and Italian BTP 10-year yields traded near 4.092%. In Japan, the 10-year JGB yield hovered around 2.881%.
Brent crude futures declined about 1.5% to trade near $91.80 per barrel, reflecting caution ahead of Washington’s planned economic measures against Tehran. The U.S. Treasury has scheduled a 14:00 press conference to outline the new punitive actions, which are expected to target foreign entities and commercial partners engaged with Iran.
Tehran responded by warning it would halt all energy exports from the Persian Gulf if the sanctions proceed, escalating tensions that have already constrained commercial tanker traffic through the Strait of Hormuz. The Strait remains a critical chokepoint for global oil flows, with supply risks keeping structural term premiums elevated.
U.S. Treasury Secretary Scott Bessent has previously sought to influence credit desks regarding bond yields and buyback operations, though fixed-income managers have expressed skepticism about the effectiveness of buybacks. The operations are financed through short-term debt issuance rather than monetary expansion, altering the maturity profile without reducing total supply.
The Treasury’s latest buyback cap is set at $4 billion per issuance, while the U.S. national gross debt surpassed $40 trillion for the first time last week. Market participants also noted pressure on bond dealer balance sheets from ongoing federal debt sales and heavy corporate issuance tied to artificial intelligence projects.
Federal Reserve Chairman Kevin Warsh is scheduled to deliver an opening speech at the Jackson Hole Economic Policy Symposium this Friday, with investors watching for signals on the timing of potential interest-rate adjustments. The FOMC’s current voting split stands at 9 to 3, and September is viewed as a potential window for a rate hold decision.
