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

A surge in Japanese bond yields has caused a global selloff in bond markets, with U.S. and European yields rising sharply. Japanese 10-year yields increased by nearly 19 basis points, the largest rise since 2022, amid concerns over increased government spending following a snap election announcement. Additionally, tensions related to Greenland and U.S. tariff threats are pressuring European defense spending, leading to expectations of more bond issuance. Analysts warn that this situation could lead to a significant increase in global borrowing costs and further instability in bond markets.

Japanese Minister of Finance: Calls for market calm

Japanese Finance Minister Katsuyuki Kitamura: I hope the market calms down. We take a responsible attitude towards public finance. We have not implemented excessively loose fiscal policies. The reduction of the sales tax will not require the issuance of bonds. We will engage in dialogue with the Bank of Japan and many other parties to restore market confidence

The Japanese Minister of Finance calls for calm in the market

Japan's Finance Minister: The government's reliance on debt in the budget is decreasing, planning to invest over $33 billion in AI and chips

Japan's Finance Minister Shunichi Suzuki stated at Davos that the government's reliance on debt in its budget is decreasing, while planning to invest over $33 billion to focus on the AI and chip industries. In response to the recent surge in government bond yields, she emphasized that while expanding fiscal spending, she will maintain fiscal sustainability and convey a commitment to long-term fiscal stability to the market. Previously, Prime Minister Fumio Kishida announced the "end of fiscal austerity," triggering a wave of government bond sell-offs

Japanese Finance Minister Katsuyuki Kitayama: We maintain close communication with the market. We also have a very good relationship with the Bank of Japan. I am confident that we can provide stability in the bond market. The situation in the bond market is expected to improve