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Commerzbank Says Global Bond Sell-Off Accelerates, Oil Prices Return to Recent Highs, US Dollar Gains

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The global bond sell-off has intensified, with the 10-year Treasury yield climbing to 4.78% in Asian trading, while the 10-year Japanese government bond yield surged to a 30-year high of 3.0%, according to Commerzbank in a note.

US Treasury Secretary Scott Bessent said a debt-reduction plan could still be several months away and that he and Federal Reserve Chair Kevin Warsh are "on the same page" on bonds. According to Japanese broadcaster NHK, Bessent also told the Bank of Japan Governor and Japan's finance minister that the Asian country should raise rates.

Separately, Bessent discussed financial ties with Russia's finance minister, said the bank.

Fed Chair Warsh said economic growth appears to have strengthened. President Donald Trump said Warsh will "do what he has to," while dismissing the prospect of rate hikes as "ridiculous."

Iran's foreign minister said the only way to resolve the current standoff is for the US to return to its commitments under the previously agreed memorandum of understanding. President Trump warned that the US could "smack" Iran, though a full-scale escalation remains unlikely, added Commerzbank.

Oil prices have returned to Monday's highs, said the bank. The US dollar is gaining. Equities turned softer in Asia on Tuesday.

European Central Bank policymaker Olli Rehn warned that the ECB "must show no complacency," as the Iran conflict could keep inflation elevated.

In Asia, China's RatingDog Manufacturing PMI beat expectations, indicating a stronger-than-expected rebound in factory activity.

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