A look at the day ahead in European and global markets from Tom Westbrook
Bond selling extended on Tuesday to drive 10-year Treasury yields to fresh 16-year highs in Asia trade and leave already-nervous stock markets cautious.
The move has no obvious trigger. But it isn't inflation, as inflation expectations have hardly budged -- investors are plainly demanding a higher return to keep on buying the stuff.
Some analysts have drawn attention to the coincidence of timing between the selloff and the Bank of Japan's signal that it would allow 10-year Japanese yields as high as 1%.
Perhaps traders are front-running a withdrawal of Japanese capital. At the same time, the theme of the Federal Reserve's forthcoming Jackson Hole symposium - "structural shifts in the global economy" - has some speculating that bond markets better shift, too, especially at the longer end.
Either way, with inflation-insulated returns of 2% on offer for 10 years the implications for risk appetite across the rest of the financial world are significant.
Small beer on the data calendar on Tuesday will keep the focus on yields and on Fed Chair Jerome Powell's Jackson Hole speech on Friday.
For one, the move seems to be making Chinese policymakers shy for fear of driving down the currency. Rate cuts on Monday were disappointingly small, and were accompanied by state banks hitting the offshore forwards market to prop up the yuan.
Market jitters are palpable as stock indexes in Shanghai and Hong Kong struggled at holding early attempts to snap losing streaks, and were loitering around flat or worse by the afternoon.
BHP Group (NYSE:BHP) on Tuesday reported its lowest annual profit in three years and forecast commodity demand stabilising in China - perhaps the best that can be hoped for in the circumstances.
Elsewhere in Asia Thailand's fugitive former premier, Thaksin Shinawatra returned to Bangkok from 17 years in exile - coinciding with a bid by his political allies to form a government with some of their biggest rivals.
The yen took a small boost on the risk of intervention after Bank of Japan Governor Kazuo Ueda met with Prime Minister Fumio Kishida.
Ueda said he wished to refrain detailing what was discussed, and said it did not include FX volatility, but the yen is just below levels that drew official intervention last year.
Key developments that could influence markets on Tuesday:
Data: UK public sector requirements, Euro zone current account, U.S. existing home sales
Earnings: Royal Unibrew, Better Collective