Japanese selloff, Greenland fears ripple through debt-ridden global bond markets

LONDON: A surge in Japan’s borrowing costs to record highs rippled out across major bond markets on Tuesday, just as markets fretted over tensions related to Greenland, highlighting their vulnerability to increased fiscal spending and high debt.

Ten-year Japanese government bond yields have surged almost 19 basis points (bps) in two days, the sharpest rise since 2022, while 30-year yields posted their biggest daily jump since 2003 on Tuesday as investors brace for increased government spending.

Prime Minster Sanae Takaichi called a snap election on Monday and is running on a platform of stimulus.

“If there is a strong mandate following the election, that could open the door to more fiscal spending,” said Seema Shah, chief global strategist at Principal Asset Management.

“It pulls a lot of global bond markets into a difficult story about debt and you can see that in the rise in borrowing costs.”

Bond investors were also grappling with US President Donald Trump’s tariff threats against European allies over Greenland, which may raise expectations that Europe will have to ramp up defence spending further through even more bond issuance.

Talk of a ‘Sell America’ trade has also resurfaced, adding to selling pressure on Treasuries.

Danish pension fund AkademikerPension said on Tuesday it was planning to sell its US Treasury holdings by the end of the month, worth some USD100 million.

US 30-year Treasury yields jumped around 7 basis points to at 4.91 percent as US markets reopened after Monday’s holiday.