Japan’s Bond Volatility Sparks Global Market Concerns – JGBs, 10Y Yield Up 18 Basis Points

Japan’s government bond (JGB) market volatility intensified on January 21, 2026, as the 10-year JGB yield surged 18 basis points to 0.97%, marking its largest daily move in three months amid renewed speculation over potential BoJ policy normalization. The spike triggered broad-based sell-offs in global fixed-income assets, with U.S. Treasury yields rising 6 basis points and eurozone bunds down 4 basis points. The Bank of Japan’s continued ultra-loose monetary stance has drawn scrutiny as inflation remains above target. Market participants now price in a 63% probability of a rate hike by March 2026, up from 45% a week earlier. “The BoJ’s hesitation to tighten risks fueling further volatility,” said Masato Tanaka, chief strategist at Mitsubishi UFJ Securities. Japanese equities dipped 1.2% on the day, led by financials and exporters sensitive to yield shifts.