Treasuries and the dollar retreated as demand for haven assets ebbed with renewed risk appetite lifting technology stocks higher. Yields on five-year notes climbed almost 2 basis points to 3.61% after lukewarm demand at an auction. Yields on the 10-year rose less than 1 basis point to about 4.04%, while the greenback fell for the first time this week as investors pushed the tech-heavy Nasdaq 100 higher. Most Read from Bloomberg Treasuries — particularly longer-dated bonds — have benefited over the past ...

Core Viewpoint - The bond market is expected to maintain a volatile trend ahead of the holiday, with the 10-year government bond yield approaching the critical level of 1.8%, leading to increased profit-taking pressure [1] Market Performance - Government bond futures closed mostly higher, with the 30-year main contract down 0.10% at 111.96, the 10-year main contract up 0.02% at 108.26, the 5-year main contract up 0.06% at 105.905, and the 2-year main contract up 0.03% at 102.414 [2] - The interbank major interest rate bonds showed narrow fluctuations, with government bonds performing slightly better than policy bank bonds [2] Overseas Bond Market - In the Asian market, Japanese bond yields rose across the board, with the 10-year yield increasing by 2.8 basis points to 2.263% [3] - In North America, U.S. Treasury yields collectively rose, with the 2-year yield up 4.71 basis points to 3.572% and the 10-year yield up 4.39 basis points to 4.279% [3] Primary Market - The Ministry of Finance's weighted average winning yields for 28-day and 182-day government bonds were 1.0959% and 1.2755%, respectively, with bid-to-cover ratios of 3.49 and 2.72 [4] - The China Development Bank's three-term financial bonds had winning yields below the market valuation, with 2-year, 5-year, and 10-year yields at 1.4944%, 1.7258%, and 1.9501%, respectively [4] Funding Conditions - The central bank conducted a 7-day reverse repurchase operation of 105.5 billion yuan at a rate of 1.40%, with a net withdrawal of 296.5 billion yuan for the day [5] - Short-term Shibor rates mostly increased, with the overnight rate down 4.8 basis points to 1.317% and the 7-day rate up 0.3 basis points to 1.488% [5] Institutional Insights - Huatai Securities noted that offshore bonds issued in the Shanghai Free Trade Zone are primarily aimed at foreign investors, with no new non-financial corporate bonds issued as of January 2026 [6] - CITIC Securities expects that the ongoing promotion of high-dividend insurance products and the influx of funds from bank deposits will continue to support premium income in 2026 [7]

Group 1 - Plans for looser fiscal policy in Japan have led to significant fluctuations in the yen and Japanese government bonds [1] - These developments have created a sense of unease among global investors [1]

Core Viewpoint - Japanese government bond yields and stocks experienced a decline as U.S. and Japanese authorities indicated readiness to intervene in the currency market to support the yen, leading to a rebound in the Japanese currency [1] Group 1 - Japanese government bond yields fell on Monday, reflecting market reactions to potential government intervention [1] - Stock prices in Japan also dropped, indicating a broader market response to currency stabilization efforts [1] - The yen showed signs of recovery following the announcements from U.S. and Japanese authorities, suggesting a direct impact on currency valuation [1]

Group 1 - The Japanese government bond market experienced a significant yield increase, prompting intervention from officials, which affected global financial markets including US Treasuries and Bitcoin [1][2][4] - Rising yields in Japan indicate increased borrowing costs, leading to market anxiety and a reevaluation of risk across various asset classes, including stocks and cryptocurrencies [2][3] - The relationship between bond yields and Bitcoin prices is highlighted, as Bitcoin often behaves like a high-risk tech stock during periods of tightening liquidity caused by rising bond yields [4][6] Group 2 - Despite the bond market stress, it is noted that this does not necessarily signal a crypto market crash, as investors anticipate central bank interventions to stabilize the situation [6][7] - Bitcoin is viewed by some investors as a "digital gold," which becomes a topic of discussion during times when traditional safe assets are under pressure [5][6] - The volatility in the crypto market is expected to persist if bond yields remain high, but if the bond market stabilizes, it could lead to a recovery in crypto prices [7]

Core Insights - A global "bond tsunami" is occurring, with Japan's government bond yields surpassing 4% for the first time in over 30 years, and U.S. bond yields reaching multi-month highs, indicating a fundamental reshaping of global interest rate dynamics [1] Group 1: Japan's Bond Market - All tenors of Japanese sovereign bond yields have collectively entered the "4 era" for the first time in thirty years [4] Group 2: U.S. Bond Market - The 30-year U.S. Treasury yield surged nearly 9 basis points in a single day, with the 10-year yield reaching 4.286% [5] Group 3: Global Bond Market - A synchronized sell-off is occurring across global bonds, including German and Australian bonds, with no market spared from the downturn [6] Group 4: Market Dynamics - The core driving force has shifted from "inflation and interest rate hikes" to a deeper crisis of "fiscal sustainability under high debt pressure," leading to a brutal repricing of the interest burden and long-term fiscal space of countries [7]

Core Viewpoint - The Japanese bond market experienced a severe sell-off on January 20, described by traders as "the most chaotic trading day in recent years," driven by concerns over Prime Minister Fumio Kishida's tax cuts and spending plans, which raised fears about Japan's fiscal sustainability [1][2]. Group 1: Market Reactions - The sell-off led to a significant increase in long-term bond yields, with the 30-year and 40-year Japanese government bond yields rising by over 25 basis points in a single day, marking the largest daily fluctuation since the impact of Trump's tariffs on global markets last year [2]. - The weak auction results for the 20-year bonds exacerbated concerns regarding Kishida's fiscal policies, creating a vicious cycle of selling and increasing anxiety [2][8]. - The turmoil quickly spread to global bond markets, with U.S. Treasury yields also rising to four-month highs, as the 30-year yield increased by 10 basis points to 4.94% and the 10-year yield rose by 7 basis points to 4.30% [5][12]. Group 2: Investor Behavior - Some investors sought opportunities amidst the panic, with Reed Capital Partners' CIO stating that the extreme market conditions prompted them to buy Japanese government bonds, indicating a belief that the market was significantly out of balance [9]. - T. Rowe Price's portfolio manager noted that investors often choose to modestly rebalance their positions during chaotic market conditions, as it is difficult to accurately predict market tops [9]. - There is a growing bearish sentiment among global bond investors towards Japanese government bonds, leading to increased interest in short-selling strategies to profit from rising yields [9]. Group 3: Fiscal Concerns - The sell-off intensified pressure on Japanese life insurance companies that hold substantial amounts of government bonds, with concerns about future fiscal stability making it difficult for these institutions to re-enter the market even if bond yields become more attractive [10]. - Kishida's plan to suspend sales tax on food and beverages, seen as an attempt to gain support for the upcoming elections, is expected to cost approximately 5 trillion yen (about 316 billion USD) annually, raising skepticism about the government's commitment to fiscal responsibility [10].

Market Overview - Stocks and bonds are experiencing a sharp sell-off, while precious metals are seeing significant gains [1] - The US dollar has declined sharply, and crude oil prices have increased modestly [1] Geopolitical Concerns - President Trump's threats to annex Greenland have raised investor concerns about a potential new trade war, which could lead to widespread foreign selling of US Treasuries and other assets [2] Bond Market Dynamics - Global bond yields are surging, particularly after a poor debt auction in Japan raised concerns about the country's fiscal health [4] - Yields on Japanese 40-year government bonds have surpassed 4% for the first time, while 30-year yields have seen their largest increase since last year's market selloff [4] - The yield on the US 30-year Treasury Bond has reached a four-month high of 4.94% [5] Precious Metals Performance - Precious metals are benefiting from the current market chaos, with gold prices rising over $140 an ounce (approximately 3%) [5] - Silver prices have increased nearly 8%, approaching $100 an ounce [5] - Gold has appreciated 73% over the last 12 months, while silver has more than tripled in value [5]

Core Insights - A global benchmark for long-term borrowing costs has reached a four-month high, with the 10-year U.S. Treasury yield rising to 4.27%, the highest since September 3 [1][2] Group 1: Impact on Borrowing Costs - The 10-year U.S. Treasury yield serves as the "risk-free" baseline rate, influencing borrowing costs across the economy and globally [2] - As the 10-year yield increases, all rates in the economy follow suit, potentially leading to financial tightening that could discourage investments and consumption [3] Group 2: Market Reactions - Bitcoin has dropped over 1.5% to $91,000, and futures tied to the Nasdaq index have decreased by over 1.6% in response to rising yields [4] - The spike in yields is attributed to President Trump's tariff threats against Europe, which may lead to retaliatory U.S. bond sales by European holders [4][5] Group 3: Global Yield Trends - The increase in U.S. Treasury yields is not isolated, as yields in Japanese government bonds have also surged following political developments in Japan [6]

Core Insights - Japan's 30-year treasury yields reached a record high of 3.52%, marking a 48-basis-point increase since November, raising concerns about potential impacts on U.S. and global markets [1] Group 1: Fiscal Conditions and Budget - Japan's government bond yields have surged significantly over the past year due to deteriorating fiscal conditions, with a record budget of ¥122.3 trillion ($785 billion) approved for the fiscal year starting April 2026, driven by increased social welfare and defense spending [2] - In addition to the budget, a ¥21.3 trillion ($140 billion) economic stimulus package was approved by the government [3] Group 2: Bond Yields and Currency Impact - Japan's 10-year government bond yield has risen to 2.12%, the highest since 1999, while the 30-year yield is at 3.46%, also a record high [3] - The Japanese Yen has depreciated over 34% against the U.S. Dollar in the past five years and 6.6% in the last six months, indicating a growing fiscal risk [5] Group 3: Market Dynamics - The rising bond yields are attributed to the Bank of Japan's continued purchasing of longer-term bonds, which caps yields and signals a rising risk of a debt crisis [4] - Japan's low-rate environment has supported significant carry trades, where investors borrow in yen to invest in higher-yielding assets abroad [6]