Rotation Code not behaving as expected

Classic question about rotating things with Quats.

I have a little script that rotates a selected object on mouse drag according to the X and Y mouse velocities. The problem I’m having is that I expect this to rotate the object in world space but it seems to be applying it in local space even though I am not using the .localRotation property.

this.gameObject.transform.rotation *= Quaternion.Euler(realVelY, 0, realVelX);

What happens is that, for example, as my mouse moves left to right, my object spins along its original Y axis, even if it has been rotated to a new location. Let me know if I need to make a picture of what I mean. I feel like it should make sense that I want it to rotate along the world axis and not the local.

Any ideas? Shouldn’t transform.rotation be rotations along the world axis? They seem to be along the local axis. The funny thing is, I tried .localRotation instead, and it seems to behave the same exact way. Wild.