Germany's 2-year bond yield rose 7bps to 2.72%, its highest level since June 11.

The Bank of Korea said in a report released Monday that the global semiconductor market remains undersupplied and it expects the AI-driven current "supercycle" to continue for some time, rejecting investor concerns that the chip cycle has peaked. The report noted: "Despite a sharp surge in demand driven by AI infrastructure investment, the pace of supply expansion has been relatively slow." It added there are no signs the semiconductor cycle is slowing.

Refinitiv, citing sources, said Japan has no plan for a broad overhaul of the Government Pension Investment Fund's (GPIF) asset allocation. The yen weakened about 0.4% to 162.36 per dollar and JGB futures extended losses after the report. Sources added Japan could still use existing allowances to shift some pension funds into domestic assets. Last week Japan's finance minister Katayama urged large pension funds, including GPIF, to boost domestic allocations, a call that had earlier supported the yen and JGBs. Some investors questioned whether the yen rally can be sustained given geopolitical risks, fiscal concerns and persistent interest-rate differentials.