Japan's 10-year hits 3% as Brent climbs above $91

The important market this morning is not the stock market. Japan’s ten-year government bond yield touched 3% for the first time in a generation, German and French ten-year yields are at fifteen-year highs, and the US ten-year is at 4.78% — its highest since early 2025. Brent crude above $91 is the thread connecting all of it.

The bond sell-off went global overnight

This is the move to understand before anything else. Reuters reports Japan’s ten-year yield reaching 3%, a level not seen in a generation; German and French ten-year yields hitting fifteen-year highs on Monday, with bund futures making a new fifteen-year low in Asian trade and French OAT futures trading at their lowest since they launched in 2012; and Australian ten-year yields posting their sharpest five-month rise.

The US moved with them rather than leading. The ten-year Treasury yield closed Monday around 4.76% and was quoted at 4.78% this morning, breaking above the 4.75% level it had been bumping against. The thirty-year is near 5.27%, up from about 5.21% a session earlier.

What is priced off the back of that is the part worth sitting with. Reuters reports markets pricing a rate hike in New Zealand on Wednesday, an ECB increase next week, and hikes this month in both the US and Japan at better-than-even odds. Three weeks ago the live question was when the Fed would cut. It is now whether it hikes in September.

Asia traded the same story. The Nikkei 225 fell about 0.6%, back below 66,000, and the Hang Seng lost roughly 1% — dragged in part by Shein’s Hong Kong debut, which Reuters put at about 8% below its offer price while the Financial Times reported a 10% slide intraday. US index futures were the calmest thing on the screen: CNBC described them as little changed, though other pre-market reads had S&P 500 and Nasdaq 100 contracts down as much as 0.5%.

Oil is doing the actual work

The bond move is not happening in a vacuum. Brent topped $91 a barrel in Asian trade, and US crude was quoted near $87.50, up about 2%, after the US and Iran exchanged strikes for the first time in a month and President Trump threatened further action. Europe’s benchmark gas price finished the summer at a three-and-a-half-year high with record seasonal lows in storage, and wheat is trading near three-year highs on the intensified fighting between Russia and Ukraine.

That combination is what turns a geopolitical headline into a rates problem. Euro-area inflation had already ticked up to 2.9% in July from 2.8% in June, driven by energy inflation accelerating to 10.3% from 8.5%. A second leg higher in crude arrives on top of that, not instead of it.

Monday’s US tape read the message plainly. The energy sector ETF (XLE) rose 2.0%, the best sector move on the board. Exxon Mobil (XOM) closed at $160.95, up 2.7% from Friday’s $156.71, and Chevron (CVX) gained 2.1% to $206.14.

Monday’s decline was narrower than the indexes suggest

The headline numbers were mild. The S&P 500 closed at 7,686.14, down 0.33%; the Dow fell 0.70% to 53,185.90; the Nasdaq Composite slipped 0.12% to 26,370.89. All three still finished August higher — the S&P gained about 2.6% on the month, and Europe’s STOXX 600 secured a fifth straight monthly advance.

Breadth was worse than the indexes. 67 of the 100 large caps in the paid feed fell on Monday, and the small-cap Russell 2000 ETF (IWM) lost 0.6%.

But the selling did not land where “inflation scare hits stocks” would predict. AI and semiconductor names went up, recovering most of Friday’s damage: Nvidia (NVDA) rose 1.5% to $220.88 from Friday’s $217.55, Micron (MU) 2.8%, Advanced Micro Devices (AMD) 1.1% and Arm (ARM) 1.2%. Qualcomm (QCOM) added 3.8% after unveiling an AI PC with HUMAIN and disclosing that Adobe will move regional AI workloads onto Qualcomm-accelerated infrastructure. The tech sector ETF (XLK) closed up 0.4% on a down day for the index.

The damage was concentrated in rate-sensitive, consumer-facing names — exactly what a higher-for-longer curve punishes. Affirm (AFRM) fell 4.3%, Uber (UBER) 4.0%, Shopify (SHOP) 3.6%, Reddit (RDDT) 3.4%, Airbnb (ABNB) 3.3%, Amazon (AMZN) 2.5% and Alphabet (GOOGL) 2.1%.

The day’s biggest large-cap gainers were company stories rather than macro ones. Roblox (RBLX) jumped 7.2% to $41.29 from $38.53 after a Citi note citing RoMonitor platform-tracking data pointed to third-quarter bookings running above the top of company guidance. CrowdStrike (CRWD) rose 5.8% to $231 from $218.40, hitting an all-time high on the opening day of its Fal.Con conference, where it launched an agentic AI security product and announced Falcon availability on Google Cloud and Snowflake’s marketplace. Tesla (TSLA) gained 5.5% to $367.95 from $348.75 ahead of Thursday’s Cybercab event. Coinbase (COIN) rose 5.3%.

Three places the tape argues with the narrative

Worth noticing, because each one cuts against the story the headlines tell.

Defence stocks fell on a day of Middle East escalation. RTX lost 1.9%, GE 2.0%, Honeywell (HON) 1.8% and Boeing (BA) 1.0%. Industrials were among the weakest sectors on a session where the US and Iran traded fire. The reflexive “conflict lifts defence” trade did not show up.

Banks fell despite the yield move. Bank of America (BAC) lost 0.6%, JPMorgan (JPM) 0.5%, Goldman Sachs (GS) 0.8%, and the financial sector ETF (XLF) 0.7%. On Friday the same names rose on the same rate story. That reversal suggests Monday’s move was read as an inflation shock rather than a growth-driven rise in rates — worse for credit, not better for margins.

Gold did nothing. The SPDR Gold ETF (GLD) closed down 0.1%, after falling more than 3% on Friday. The classic geopolitical hedge has now sat out an oil shock and a fresh exchange of strikes. Higher real rates are still winning that argument, and it is the cleanest live signal of which force the market thinks is in charge.

What actually held up were defensives and non-discretionary retail: Walmart (WMT) rose 1.7%, Pfizer (PFE) 1.8% and Procter & Gamble 0.9%.

What to watch today

ISM Manufacturing PMI for August, 10:00 AM ET. July printed 55.6; consensus is around 55.2. Above 50 is expansion.
The ISM prices-paid sub-index inside that report. It was 71.1 in July and is the first hard read on whether the crude move is reaching input costs.
S&P Global US Manufacturing PMI, final August reading, 9:45 AM ET. Consensus around 53.2.
JOLTS job openings for July, 10:00 AM ET. Prior 7.359 million, consensus near 7.33 million — the last labour-market datapoint before Friday’s payrolls.
Construction spending for July, 10:00 AM ET. Prior -0.1%.
Euro-area flash inflation for August, this morning. July was 2.9% year over year, with energy at 10.3%.
Dell Technologies and Palo Alto Networks report after the close. Palo Alto Networks (PANW) rose 2.8% into the print on Monday; consensus for its quarter is around 98 cents a share on roughly $3.35 billion in revenue.
The ten-year Treasury yield’s hold above 4.75%, and whether Brent stays above $91 through the US session.
API weekly crude inventories, 4:30 PM ET.
Friday’s August employment report, the last major data before the September FOMC meeting.

Not financial advice. iTrading Buddy summarizes publicly available market data and news; every figure above is sourced from the reporting available before the US open on the date shown. Verify anything you act on.