Eurozone government bond yields edged higher Thursday as elevated natural gas prices replaced falling oil as the primary inflation concern for European traders, according to Danske Bank's Jesper Fjarstedt. European gas prices sit near five-month highs even as Brent crude declined on reports of an interim framework between Iran and Oman to resume safe shipping via the Strait of Hormuz. The 10-year German Bund yield rose 0.7 basis points to 3.229%, per Tradeweb, with no eurozone bond supply scheduled.

Meanwhile, Japanese government bond futures gained in early Tokyo trading ahead of a speech by Bank of Japan Deputy Governor Himino in Saitama, Japan. Markets are increasingly pricing in a BOJ rate hike at the September meeting, driven by persistent inflation, yen weakness, and rising Japanese yields, according to StoneX's Matt Simpson. Benchmark 10-year JGB futures rose 0.06 yen to 126.54 yen.