MORNING BID EUROPE-The dog days are over

A look at the day ahead in European and global markets from Tom ​Westbrook Europe enters autumn with benchmark gas prices at 3-1/2-year ​highs and stocks at their lowest ‌ever for ​the time of year on records stretching back to 2011.

Winter will be a gamble because a scramble for gas, with Qatar's supply disrupted by the Iran war, ‌has deepened a "backwardation", where near-term prices are above those for winter. That means there's no economic sense in stockpiling gas now, leaving Europe to hope the scorching summer isn't followed by a deep freeze.

Bond markets are coming back from the summer lull decidedly unimpressed, ‌with bund futures trading at 15-year lows in Asia and OAT futures at their lowest since launching in ‌2012. French and German yields hit 15-year tops on Monday with fiscal pressures mounting in both countries. European inflation data due later in the session is likely to cement market expectations for a European rate hike next week.

U.S. President Donald Trump threatened further strikes against Iran after the first ⁠exchange of ​fire in a month. Yields were ⁠also on the rise through the Asia session with 10-year Treasury yields hitting a 20-month high in Tokyo trade and Japan's 10-year benchmark touching ⁠3% for the first time since 1996.

Stocks were down in Seoul, Tokyo, Sydney and Hong Kong, where shares in fashion giant Shein Global ​fell 8% in their first day of trading after an initial public offering that was already discounted on ⁠growth and regulatory challenges. Some investors have noted that much of the rise in global bond yields is driven by real yields going up, or ⁠in ​other words better growth expectations — so maybe not such bad news for stocks after all.

But there's also a worrying rise in term premia. By one measure, published by the New York Fed, the 10-year Treasury term premium had more ⁠than tripled from around 26 basis points in January 2025 to more than 80 bps in June. Since the end of ⁠June, nominal 10-year Treasury ⁠yields have risen about 36 basis points against a 9 bp rise in breakeven inflation expectations, suggesting some mixture of rises in term premium and real yield.

Key developments that could influence ‌markets on Tuesday: Economics: ‌Euro zone CPI, US JOLTS, ISM Manufacturing

Earnings: Dell, Palo ​Alto Networks (Editing by Jamie Freed)