Higher oil prices rippled through global bond markets on Monday, sparking a further sell-off in government debt and denting equity appetite. Brent crude gained over 2 percent to about $106.60 a barrel in Asian trading. Selling pressure on US Treasuries resumed, with 10-year yields rising 0.04 percentage points to 5.2 percent. Ecaterina Bigos, senior market strategist at BNP Paribas Asset Management, warned the combination of strong growth and high energy prices posed a risk to future inflation expectations. Futures markets indicate traders have increased expectations of Federal Reserve rate increases following strong economic data.

In Japan, short-dated government debt was among the most exposed, with two-year yields hitting 1.97 percent before dipping to 1.96 percent, the highest since 1995. Norbert Ling of Invesco noted the repricing in the US Treasury market is spilling over into other rates markets. Selling pressure was also attributed to greater corporate bond issuance funding the AI build-out, creating competition for capital.

Asian stock markets saw selling pressure, with South Korea's Kospi and China's CSI 300 slipping 2.5 and 2.2 percent respectively. Futures for the S&P 500 and Nasdaq 100 fell 0.3 and 0.6 percent. Gold sold off 2 percent to $4,200 an ounce as central banks sold reserves during higher energy prices to protect currencies.