US 10-year yield hits highest since late August
US 30-year yields rise to highest since early September
US 2⁄10 yield curve hits widest on two weeks
US rate futures price in less than two cuts in 2026
(Recasts, adds new comment, byline, NEW YORK dateline; updates prices)
By Gertrude Chavez-Dreyfuss, Tom Westbrook and Alun John
NEW YORK/LONDON/SINGAPORE, Jan 20 (Reuters) -
U.S. long-dated Treasuries sold off on Tuesday, driving yields to multi-month highs, as the market reacted to turbulence in Japanese government bonds and persistent global tensions stirred by President Donald Trump’s renewed threat of a trade clash with Europe over its proposed acquisition of Greenland.
With U.S. markets closed on Monday for a holiday, Tuesday marked investors’ first opportunity to respond to weekend developments, including
Trump’s warning
that he would impose an additional 10% tariff starting February 1 on imports from several European countries unless the United States is allowed to buy Greenland.
But analysts said that was not the only thing in the mix, as Japanese government bonds on Tuesday also
saw significant selling
, with spillovers into U.S. and European markets, after Prime Minister Sanae Takaichi’s calling of a snap election shook confidence in the country’s fiscal health.
A weak auction of Japan’s 20-year bonds further exacerbated selling of JGBs.
“Japan started it off with their 20-year auction, which saw very little demand and then you had fiscal concerns start to increase that put upward pressure on their fixed income markets,” said Jim Barnes, director of fixed income, at Bryn Mawr Trust in Berwyn, Pennsylvania.
“That then spilled over into other developed markets like U.S. Treasuries,” he added.
The benchmark U.S. 10-year yield (US10YT=RR) hit its highest since late August of 4.313%, and by late morning trading, was last up 4.8 basis points at 4.281%. Bond yields move inversely to prices.
U.S. 30-year yields rose 7.4 bps to 4.914%, after earlier hitting its strongest level since early September of 4.948% (US30YT=RR) . They are on pace for their largest daily increase since mid-December.
On the front end of the curve, the U.S. 2-year yield slipped 1.5 bps to 3.584% (US2YT=RR) .
As a result, the yield curve steepened on Tuesday, with the spread between two-year and 10-year yields widening to as much as 70.9 bps (US2US10=TWEB) , the largest gap in roughly two weeks. The curve was last at 68.5 bps, compared with 63.3 bps last Friday.
The curve showed a bear-steepening scenario, with long-term yields rising faster than short-term rates, reflecting market concerns about a pickup in inflation.
<h3>NO TO TARIFFS</h3>
Major European Union states have since decried the tariff threats as blackmail and the bloc is looking at retaliating with its own measures.
The latest escalation of trade tensions also sparked broad selling of the dollar (=USD) and Wall Street shares in a move reminiscent of last year’s crisis of confidence in U.S. assets following Trump’s “Liberation Day” announcement.
Kenneth Broux head of corporate research FX and rates at Societe Generale said it was “a perfect storm” of factors driving the moves in Treasuries.
He pointed to “carnage” in the Japanese bond market, as well as the tariff threats, and simple momentum - yields had already been rising and the 10-year yield closed above 4.20% on Friday, which he said was a “technically important” level.
The Federal Reserve, meanwhile, will meet next week to decide on monetary policy and the market participants expect the central bank to hold interest rates steady at the 3.5%-3.75% target range.
U.S. rate futures priced in on Tuesday just 47 bps of easing this year, or less then two rate cuts of 25 bps each. That was 53 bps in late December.
“The main driver for Treasuries this year would be economic growth and then monetary policy,” said Bryn Mawr’s Barnes.
“I think it starts with the economy where the data comes out and you know it’s supportive of an economy that’s growing 2% and a labor market that’s healthy. That’s going to lead to rate cuts being taken off the table for 2026.”

U.S. long-dated Treasuries experienced a sell-off, pushing yields to multi-month highs, influenced by President Trump's tariff threats and turmoil in Japanese government bonds. The 10-year yield reached 4.313%, the highest since late August, while the 30-year yield hit 4.914%. Analysts noted that Japan's weak bond auction and fiscal concerns contributed to the market's reaction. The yield curve steepened, indicating inflation concerns, as major EU states condemned the tariff threats. The Federal Reserve is expected to maintain interest rates steady in its upcoming meeting.

- U.S. long-dated Treasury yields rose to multi-month highs, driven by market reactions to global tensions and trade threats from President Trump regarding tariffs on Europe.  
- The benchmark 10-year yield reached 4.313%, while the 30-year yield hit 4.914%, leading to a steepening yield curve, signaling market concerns about inflation.  
- Economic growth and upcoming Federal Reserve monetary policy are anticipated to influence Treasury yields in 2026, with futures pricing in less than two rate cuts for this year.

TREASURIES-US long bonds slide on Trump's tariff threat, Japan selloff