Focus shifted to Treasury secretary Scott Bessent, who announced that US debt managers would begin buying back greater quantities of less liquid longer-dated Treasury bonds. While framed as smoothing market functioning, it is being interpreted as an active measure to take pressure off long bond yields, which have risen partly due to changes at the Fed under new chair Kevin Warsh, who has withdrawn official forward guidance. Market turbulence this early in Warsh's tenure bodes badly if he plans to shrink the Fed's balance sheet. Attention now turns to Jackson Hole, where Warsh speaks on Friday.

Fresh UK data suggested the Bank of England can comfortably keep rates on hold at its September meeting. Headline inflation arrived at 2.9 per cent in July, up from June's 2.6 per cent and pushed higher by the energy-price cap reset, while private sector regular pay growth fell again to 2.8 per cent. Money markets predict just a 19 per cent chance of a September rate rise, rising to 50 per cent at November's meeting.

With three dissenting votes for higher rates in July, Fed policymakers are growing increasingly hawkish; futures price a 35 per cent chance of a September hike. Japan's economy grew just 0.3 per cent in the second quarter, below expectations, but with inflation rising towards target, money markets price a 66 per cent chance of a Bank of Japan move in September.