Bond Yields Soar as Fed Meeting Looms with Rate Hike Odds at 87%

Global bond yields rose sharply last week, with the US 10-year Treasury bond yield increasing by 19 basis points to 4.97%. The UK's 10-year gilt also hit a near-decade high of 5.35%, while Japan's 10-year bond yield reached multi-year highs of 2.99%.

The European Central Bank (ECB) delivered its third rate hike of the year on Thursday, raising its policy rate to 2.50%. The ECB also increased its inflation and GDP growth projections, but President Christine Lagarde declined to signal any future rate hikes.

Looking ahead to this week's events, attention turns to the Federal Reserve (Fed) meeting on Wednesday, where the release of the Summary of Economic Projections (SEP) is expected. The markets now price a 87% chance of a rate hike, with Fed funds futures implying three rate hikes over the next year.

Additionally, August retail sales data is due out on Wednesday, with expectations pointing to a rebound after July's decline. Regional business surveys, including the New York and Philadelphia Fed surveys, will also be released this week.