U.S. Treasuries and other countries’ bonds continued to sell off on Tuesday as White House comments on tariffs stoked fresh concerns about a trade war between the U.S. and Europe.

By 6:10 a.m. ET, U.S. Treasury yields had spiked, particularly at the long end of the maturity curve. yield of 30 year treasury It rose nine basis points to trade at 4.93%, moving it closer to the key benchmark of 5%.

On the other hand, the benchmark yield is 10 year treasury It added 6 basis points and settled at around 4.291%. One basis point equals 0.01%, and yields and prices move in opposite directions.

Yields also rose in Europe. of 10 year german federal bond The country’s yield, the eurozone benchmark, rose 4 basis points to 2.8831%, although 30 year bond It rose almost 6 basis points to 3.512%.

At the same time, British government bonds, known as gilts, fell sharply, with the 30-year bond yield adding nine basis points to trade at 5.253% and the benchmark 10-year bond yield adding seven basis points. The UK currently has the highest long-term government borrowing costs of any G7 country.

Yields on government bonds issued by the governments of France, Italy, Switzerland and Australia also rose on Tuesday.

“The fundamental problem with global bond markets is this: Major governments are running deficits. They’re accumulating a lot of debt, and investors are starting to show that they’re not happy about it,” said Ed Yardeni, president of Yardeni Research.

Elsewhere, Japan The yield on the 40-year Treasury note hit a record high on Tuesday as investors worried that a proposed cut in food sales taxes could worsen the country’s fiscal situation.

Long-term interest rates rose nearly 3 basis points to 4.213%, the highest level since the introduction of the 40-year maturity.

Yields on short-term bonds rose significantly as well. of 10 year government bond yield Yields rose more than 10 basis points to 2.38%, the highest level since 1999. 20 years tenor It rose about 22 basis points to 3.47%.

The decline came a day after Prime Minister Sanae Takaichi said he would dissolve parliament on Friday and call a snap election on February 8, setting the stage for a campaign expected to focus on economic policy.

“Very long-term government bond yields are rising not only due to structural supply-demand imbalances, but also due to new pricing in term and risk premiums as markets absorb more expansionary fiscal stances and sustained inflation,” said Masahiko Lu, senior fixed income strategist at State Street Investment Management.

This repricing has reinstated familiar market patterns, he added. “This has brought back the classic ‘high market trade’ dynamic of high Nikkei, government bonds and a weak yen,” Lu told CNBC.

This was a repeat of the volatile situation seen last October, when Japanese markets reacted to Takaichi’s comments and policy signals suggesting fiscal policy easing, but later stabilized, he added.

Lu said the current repricing does not indicate any structural distress, but has strong technical and sentimental implications.

Lu added that the yield curve is likely to remain steep until the first half of this year until bond issuance patterns adjust and domestic banks return as buyers, stabilizing the yield curve.

The decline in Japan’s government debt is an issue that goes far beyond its borders, given the country’s outsized role in global capital flows.

Japanese investors have been the most active buyers of foreign bonds, especially US Treasuries. The East Asian nation is the largest foreign holder of U.S. government debt, according to the U.S. Treasury Department’s Treasury International Capital.

As of November 2025, Japanese companies hold approximately $1.2 trillion in US Treasury securities. The UK came in second place with approximately $888 billion.

“Japanese investors have historically been particularly active in buying bonds in other markets, especially in the United States, where interest rates have been higher than in Japan,” Yardeni said.

“Now that yields are rising, you’ll find that Japanese bond investors are more likely to stay home and invest in their own bonds rather than the U.S., which could put upward pressure on U.S. bond yields,” he added.

After years of pandemic and stimulus-era borrowing, global debt is still rising. Maintaining over 235% of global GDP Despite a slight decline in private debt, government debt continues to rise and outpace economic growth.

Some analysts said geopolitical risk was also becoming an increasingly important factor driving bond markets, amid growing concerns that governments would respond to instability with increased defense spending.

“I think recent geopolitical developments have disrupted the bond market, because it’s clear that if the geopolitical situation continues to become more volatile, more defense spending will be needed,” Yardeni said.

Some strategists also warn that Europe’s large holdings of U.S. assets could complicate global capital flows. Analysts at Deutsche Bank noted that Europe is the United States’ largest foreign lender and said a flare-up of trade tensions related to Greenland risks destabilizing long-term capital flows.

“The United States has a big weakness: it relies on other countries to pay its bills through huge external deficits, while Europe is America’s biggest lender,” said George Saravelos, global head of currency research at Deutsche Bank.

European countries hold $8 trillion in U.S. bonds and stocks, about twice as much as the rest of the world combined, according to Deutsche Bank data.

Bond yields and prices move in opposite directions, so if investors are reluctant to lend to the government, bond prices will fall and yields will rise.

A dramatic rise in yields (essentially the amount of interest governments pay on their debt) could also have far-reaching effects across the economy.

Bond yields reflect the borrowing costs of the government issuing the bond, but can also affect mortgage rates, investment returns, and personal borrowing.