USD Rates: Bond selloff resumes
Treasury yields rose with oil prices.
Group Research - Econs, Eugene Leow10 Sep 2026
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The US Treasuries selloff resumed overnight amidst a rapid climb in Brent crude prices above USD 101/bbl. Note that this yield rise came despite a further increase in the first Treasury buyback operation to USD 6bn, higher than the previous guidance of USD 4bn. The remaining six scheduled buybacks were still guided at USD 4bn, possibly disappointing investors that Treasury Secretary Bessent had not been more aggressive. With key levels having broken (2Y at 4.4% and 10Y at 4.8%), we note considerable uncertainties on where yields could go in the short term. Below we lay out the considerations.

From a technical / momentum perspective, having broken resistance, yields are biased higher, with 5% for the 10Y very plausible. However, real money investors will probably view current yield levels to be attractive and are awaiting clearer signs that UST selling exhaustion has been hit. We also note two event risks. PPI and CPI figures, scheduled for the coming two days, could pose asymmetrical downside risks to front to belly yields. The escalating conflict between US and Iran also has broader spillover beyond oil. We note that EGB and Gilt yields are rising quickly (higher sensitivity to energy prices), putting upward pressures on global rates. 

As things stand, sentiment is getting dicey as higher yields start to bite. Markets have to clear the data releases, watch oil while also gauging the odds that Bessent will push for more aggressive measures to contain long-end yields. Volatility is likely to pick up and we caution upside risks to our UST and Bund yield forecasts.

Eugene Leow

Senior Rates Strategist - G3 & Asia
eugeneleow@dbs.com



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