By Emese Bartha
Global government bond markets move to calmer waters on Wednesday after a massive selloff Tuesday, which was sparked by a huge rise in Japanese government bond yields.
Bond investors cautiously await President Trump's speech at the World Economic Forum in Davos, Switzerland, at 1330 GMT, which could spark further volatility amid tensions over his plans to acquire Greenland.
Japanese bonds rebounded strongly on Wednesday following a sharp selloff that reverberated across global debt markets, after Finance Minister Satsuki Katayama called on market participants to calm down.
The selloff was spurred by fears that a coming election could lead to profligate fiscal spending that might worsen the country's public finances. This drove long-dated Japanese government bond yields to their highest levels in decades.
This week's surge in Japanese bond yields "reminds us that inflation and debt dynamics are issues for bond markets--ones the U.S. Treasury market should not ignore," ING rates strategists said in a note.
The 30-year Japanese government bond yield fell almost 8 basis points to 3.680%, while 40-year yields dropped a more modest 0.6 basis point to 4.037%, according to LSEG data. U.S., eurozone and U.K. government bond yields also declined across the board Wednesday.
"Bond markets remain uneasy but sentiment seems to [have calmed] down," Commerzbank Research's Erik Liem said in a note. Trump's speech in Davos, however, "promises further volatility," he said.
The U.S. president is expected to address his intention to acquire Greenland after threatening tariffs against various European countries over the issue.
Trump's threats have sparked concerns that foreign investors could move away from U.S. assets. Danish pension fund AkademikerPension said it plans to sell its $100 million investment in U.S. Treasurys because of the U.S.'s poor finances.
The DXY dollar index--which measures the dollar's value against a trade-weighted basket of currencies--is last steady at 98.628, having fallen sharply to a two-week low of 98.246 on Tuesday.
Trump might also add further hints to his favored candidate for the next Federal Reserve chair. Former Fed governor Kevin Warsh currently looks like the front-runner to succeed Jerome Powell after the expiry of his mandate.
U.S. Treasury yields fall by up to 2.5 basis points, led by the 30-year yield which falls to 4.895%, while the 10-year Treasury yield falls 2.4 basis points to 4.270%.
The 10-year German Bund yield falls 1 basis point to 2.850%, and the 10-year U.K. gilt yield is down 2.5 basis points at 4.431%.
Write to Emese Bartha at emese.bartha@wsj.com
(END) Dow Jones Newswires
January 21, 2026 05:24 ET (10:24 GMT)
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