Markets Wrap: US Stock Futures Advance, Japanese Bonds Rebound

(Bloomberg) — Japanese bonds rebounded after a selloff that rippled through global debt markets, and US equity-index futures rose as volatility showed signs of easing. Yields on 40-year Japanese debt fell 22 basis points to 3.99% after Finance Minister Satsuki Katayama called for calm following a rout that had pushed super-long yields to all-time highs. In a further sign that markets were finding some footing, Treasuries edged up and futures contracts for the S&P 500 rose 0.3% after the underlying gauge had its steepest loss since October. Meanwhile, stocks extended their losses, with Asian shares falling 0.7% and futures pointing to a flat open for European equities. Haven demand persisted, with gold and platinum climbing to fresh records, while silver was near an all-time high. Traders on Wednesday will be closely watching President Donald Trump’s scheduled trip to the World Economic Forum in Davos, after he ratcheted up tensions with Europe. Trump’s threat to impose tariffs on European nations that rejected his proposal to purchase Greenland has unsettled markets, prompting investors to reassess risk after an AI-fueled rally took global stocks to all-time highs. The selloff in Japanese bonds compounded the pressure, adding to strains driven by uncertainty over US policy and trade. “Tariff War 2.0, or Territory War 1.0 if you prefer, is in full swing and has potential to cause significant near-term market disruptions,” said Victoria Greene at G Squared Private Wealth. “A lot depends on how the next few weeks play out. So, we are not ‘panic selling,’ but watching carefully and ready for volatility.” While traders have been able to get past a whirlwind of other unexpected developments this year — including the White House’s capture of Venezuela’s leader and its renewed attacks on the Federal Reserve — Tuesday’s moves suggest that investors’ willingness to shrug off earlier shocks is beginning to erode. After the meltdown in Japanese bonds during the Asian session, stocks fell in Europe and the US. Bond yields jumped. Then there was also news that a Danish pension fund was planning to exit Treasuries. “Despite elevated macro noise — from renewed trade-war rhetoric to rising global yields — flow has consistently pointed to monetization of hedges and volatility selling, not panic buying,” wrote Chris Murphy, derivatives strategist at Susquehanna International Group LLP. What Bloomberg strategists say… Investor patience won’t last long unless there is swift official support from Japanese authorities to stabilize the JGB curve. Katayama calling on market participants to calm down won’t carry much weight with traders when they can see benign neglect of the Japanese currency. — Mark Cranfield, Markets Live strategist. Click here for the full analysis. Tuesday’s trading session in Tokyo saw what dealers said was the most chaotic session in recent memory. Yields on Japan’s 30- and 40-year bonds both jumped by more than 25 basis points, the biggest move since Trump’s ‘Liberation Day’ tariffs rattled global markets last year. As trading kicked off on Wednesday, Japanese sovereign debt rebounded, easing some concerns. Also, Japan’s second-biggest bank plans to aggressively rebuild its local sovereign debt holdings once a wild surge in yields runs its course. Asking market participants to calm down, Katayama pointed to Japan’s lowest reliance on debt issuance in 30 years, rising tax revenue and the smallest fiscal deficit among Group of Seven economies as evidence to support the government’s view that its fiscal policy is responsible and sustainable. “Japanese government bonds are settling and are bid across the board with yields ticking lower,” said Andrew Jackson, the head of Japan equity strategy at Ortus Advisors Pte in Singapore. “While they remain highly elevated after yesterday’s surge, with banks and insurance names also coming down, it feels like the worst is behind us as far as the JGB meltdown.” Corporate News: Netflix Inc.’s shares fell after warning of higher program spending and the cost of closing its deal with Warner Bros. United Airlines Holdings Inc. beat Wall Street estimates for the fourth quarter and anticipates a strong 2026, driven by demand from high-spending domestic passengers and international travelers. Kraft Heinz fell 4.2% in after-hours after the food company registered up to 325 million shares for potential sale by holder Berkshire Hathaway. Some of the main moves in markets: Stocks S&P 500 futures rose 0.3% as of 3 p.m. Tokyo time Japan’s Topix fell 0.9% Hong Kong’s Hang Seng was little changed The Shanghai Composite rose 0.4% Euro Stoxx 50 futures were little changed Currencies The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1716 The Japanese yen was little changed at 158.21 per dollar The offshore yuan was little changed at 6.9615 per dollar Cryptocurrencies Bitcoin rose 0.5% to $89,791.64 Ether was little changed at $2,988.08 Bonds The yield on 10-year Treasuries declined two basis points to 4.27% Japan’s 10-year yield declined 8.5 basis points to 2.285% Australia’s 10-year yield was little changed at 4.78% Commodities West Texas Intermediate crude fell 0.9% to $59.80 a barrel Spot gold rose 2.3% to $4,871.20 an ounce This story was produced with the assistance of Bloomberg Automation. –With assistance from Joanna Ossinger, Abhishek Vishnoi, Winnie Hsu and Mia Glass. ©2026 Bloomberg L.P.